BMO Capital said it has lowered Merck & Company’s (MRK) price target to $70 from $72 while reiterating an outperform rating.

Analyst Alex Arfaei said in a note to clients that he acknowledges that his thesis has been weakened following lower expectations in Hepatitis-C, and increased competitive pressure for key franchises.

BMO said Merck is primarily dependent on Keytruda for growth, and although the broker’s new oncologist survey and IMS analysis indicate a solid Q3 and approximately 45% share in 1L-NSCLC, it said that immuno-oncology (IO) is becoming increasingly competitive.

“Nonetheless, we doubt the competitors will show meaningfully differentiated data and expect Keytruda to maintain its lead in 1L-NSCLC,” Arfaei said. “R&D and commercial execution in IO are now paramount for Merck.”


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