Barclays has opened coverage of Merck & Co. with an overweight rating and a price objective of $140, signaling that the bank believes forthcoming product launches and pivotal clinical results could materially alter investor expectations for the drugmaker. The research note singled out several specific catalysts that Barclays judges capable of lifting the shares.
Chief among those catalysts is enlicitide, which Barclays highlighted as the first oral PCSK9 inhibitor. The analyst noted that enlicitide is positioned for an accelerated regulatory path, after the program received a Commissioner’s National Priority Review voucher that is expected to prompt a fast review by the U.S. Food and Drug Administration.
Barclays also flagged upcoming pivotal readouts for Merck compounds this year, including the ATLAS-UC readout for tulisokibart. That result represents the first registrational study for the emerging TL1A class in inflammatory bowel disease, and Barclays views the outcome as a key informational event for the company’s pipeline trajectory.
On valuation, Barclays observed that Merck is trading at a near-five year discount to the S&P 500 Health Care sector when evaluated on a two-year forward price-to-earnings ratio. The firm argued that the combination of positive clinical news and new product introductions could drive both earnings upside and an expansion of valuation multiples.
In separate developments that the note and recent market commentary referenced, Merck has entered a significant collaboration with the Mayo Clinic aimed at enhancing drug discovery by combining the clinic’s clinical insights and genomic datasets with Merck’s analytics and artificial intelligence capabilities. The alliance is intended to improve the early stages of drug development through tighter integration of clinical and molecular data.
Regulatory momentum for Merck also includes a fresh approval for its immunotherapy Keytruda. The U.S. Food and Drug Administration has approved Keytruda for use in certain ovarian cancer patients - specifically those with platinum-resistant epithelial ovarian, fallopian tube, or primary peritoneal carcinoma expressing PD-L1 - expanding the drug’s labeled indications.
Several other brokerages have recently updated their views on Merck. Deutsche Bank upgraded the stock from Hold to Buy, raising its price target to $150 and arguing that the market has been overly discounted because of concerns around the upcoming patent expiration for Keytruda; the bank drew parallels to how AbbVie managed Humira’s patent expiration. Guggenheim raised its price target to $140 and kept a Buy rating even though Merck’s 2026 revenue guidance is below consensus estimates. Bernstein increased its target to $100 and maintained a Market Perform rating, while citing optimism about Merck’s pipeline and forthcoming product launches.
Taken together, these analyst moves and the company’s regulatory and academic partnerships form the basis for Barclays’ constructive stance. The bank believes that clinical readouts and newly approved indications, alongside the potential for improved earnings, create a narrative for upside in both fundamentals and valuation.
Market context
- Sector impact - The developments are relevant primarily to the pharmaceutical and broader health care sectors, with knock-on effects for biotech investors focused on immuno-oncology and inflammation franchises.
- Valuation lens - Barclays’ comparison to the S&P 500 Health Care sector on a two-year forward P/E provides a valuation-based rationale for the overweight rating.
Bottom line
Barclays’ initiation at overweight with a $140 target rests on a set of near-term clinical and regulatory catalysts, including an oral PCSK9 candidate that may receive expedited review and a first registrational readout for a new mechanism in inflammatory bowel disease. Other analyst upgrades and regulatory approvals add to the investor discussion, supporting the case for potential earnings upside and multiple expansion, according to the note.