Deutsche Bank upgrades Merck to Buy, citing path beyond Keytruda patent cliff
Deutsche Bank upgraded Merck to Buy and raised its price target to $150 from $115, citing a clear path beyond Keytruda’s patent expiration. Merck meanwhile forecast 2026 revenue of $65.5 billion to $67.0 billion and said it faces a $2.5 billion headwind this year.
Merck & Co., Inc. was upgraded to Buy from Hold by Deutsche Bank on February 13, with the price target raised to $150 from $115. The bank said the market appears to be undervaluing the company because of concerns around Keytruda’s upcoming patent expiration and pointed to a “clear path” for Merck to manage this transition. It also said that, excluding Keytruda, the company still has visible growth drivers, with a trough earnings “formation at hand.”
Earlier, on February 3, Merck issued a 2026 forecast that came in below Wall Street expectations. The company said the upcoming loss of exclusivity for its diabetes drug Januvia and other older medicines will have a bigger impact than analysts had anticipated, despite a strong fourth quarter, when Merck beat both profit and sales estimates, supported by continued demand for Keytruda.
Merck expects 2026 revenue to range between $65.5 billion and $67.0 billion. The high end of that range still falls short of the average analyst estimate of $67.6 billion, based on LSEG data.
The company also expects a $2.5 billion headwind this year. This includes the impact of generic competition, Medicare price negotiations, and lower sales of its COVID-19 treatment, Lagevrio.
The CEO said the disconnect with the Street is in a lot of the company’s legacy products, which are all largely going off patent. He added that drugs such as Januvia, along with related treatments Janumet and Janumet XR, and Bridion, which is used to reverse the effects of muscle relaxants, could deliver weaker results than analysts currently expect.
Merck operates as a global healthcare company and develops and delivers prescription medicines, including biologic therapies, vaccines, and animal health products. Its Pharmaceutical segment focuses on human health treatments and vaccines.