BMO Capital upgraded shares of Merck & Company Inc (NYSE:MRK) to Outperform from Market Perform and downgraded shares of Bristol-Myers Squibb (NYSE:BMY) to Market Perform from Outperform in a note Friday.
Alongside the upgrade, analysts raised the MRK price target to $132, stating the company reported "another strong quarter" while also strengthening the narrative around growth.
"We all know the Keytruda LOE is coming in 2029, but we're highly encouraged with the recent substantial steps to address the eventual revenue loss (Prometheus, Daiichi ADC deal, sotatercept, MK-0616)," wrote the analysts.
"All this points to continued multiple expansion (beyond X to Y from 1/1/23 to now) relative to peers. We think MRK is becoming one of the more attractive growth through LOE stories among BioPharma peers," they added.
The BMY price target was reduced to $60, with analysts stating the firm is stepping to the sidelines as the multiple expansion story it has been telling is "unlikely to materialize soon."
"Two quarters of misses and guidance resets make Bristol difficult to own relative to peers," the analysts wrote. "Single-digit multiple stocks eventually expand, but we're concerned that stagnation is more likely near-term, as the business transitions, new commercial products take longer to inflect."
"The pipeline is not bad, but ultimately, investors want sustained growth," they concluded.