Analysts at TD Cowen downgraded Pfizer (NYSE:PFE) and Illumina (NASDAQ:ILMN) to Market Perform in separate notes Thursday while also raising Merck (MRK) to Outperform.
When it comes to Pfizer, the investment bank maintained a $32 per share price target on the stock and said they estimate the company will deliver strong EPS growth during 2024-26.
However, while after a very challenging 2023, much pessimism appears to be reflected in PFE stock, TD Cowen doesn't have much conviction in the outlook, "making it tough to pound the table even from these levels." As a result, the bank is downgrading, pending greater clarity on its prospects.
The Illumina price target was kept at $144 per share, noting that the stock is up 40% from recent lows and within 10% of their price target, prompting the rating cut.
"We remain optimistic on the Nova X cycle & the opportunity for better execution & performance under new CEO Jacob Thaysen," said TD Cowen. "Our PT assumes 25x our core '25 EPS (we model healthy improvement by '25), and given ILMN's growth/margin outlook, we view 25x as appropriate, leaving a more balanced risk/reward at current levels."
For Merck, TD Cowen lifted the price target to $135 from $125, saying that the company offers greater near-term EPS visibility and solid news flow. However, they noted the stock was only an average performer in 2023 and currently sells at a below-average PE multiple.
"We have confidence that MRK can deliver," declared TD Cowen. "And our analysis suggests investors should look through even large patent expirations such as Keytruda. All told, MRK could be an above-average performer in 2024."