Deutsche Bank moved Merck (NYSE:MRK) from a Hold rating to Buy on Friday, simultaneously increasing its price target to $150 from $115. That new valuation implies material upside from Merck's recent trading level of $119.24, a level InvestingPro data indicates is below the stock's assessed Fair Value.
The bank's decision rests on the view that the market is overemphasizing risks tied to the approaching patent expiration for Keytruda, Merck's primary oncology franchise. Deutsche Bank draws a comparison to AbbVie's handling of Humira's patent cliff, suggesting Merck could navigate a similar trough period without permanent impairment to value. The stock has already displayed momentum, returning 46.56% over the past year and trading close to its 52-week high of $122.66.
On fundamentals, Deutsche Bank estimates Merck's trough earnings per share at roughly $11, which the firm notes sits above the Street's consensus near $10. The analyst house highlights that buying at points of trough clarity - when visibility on post-peak earnings becomes clearer - has historically created attractive entry points for investors. At present, Merck's price-to-earnings multiple stands at 16.57, a level InvestingPro describes as high relative to near-term earnings growth expectations.
Deutsche Bank's longer-term revenue view excludes Keytruda and anticipates low-single-digit terminal growth, a trajectory the bank likens to AbbVie's profile prior to a valuation multiple re-rating from about 11x to 15x, when markets concluded Humira's trough was manageable. The brokerage also references Merck's financial strength, noting an overall financial health score of 3.2, labeled "GREAT" in InvestingPro's assessment.
Pipeline diversification and recent acquisitions play a central role in Deutsche Bank's thesis. The bank cites the additions of Winrevair, Ohtuvayre, and CDTX as contributors to future revenue streams, estimating these assets could generate more than $35 billion in risk-adjusted revenue by 2035. Those inflows are expected to help smooth the company's transition away from Keytruda-dependent sales.
Merck's shareholder return profile is also highlighted. The company yields 2.85% in dividends and has maintained an uninterrupted dividend payment record for 56 consecutive years, a point of interest for income-focused investors.
Regulatory and market developments continue to shape the story. The U.S. Food and Drug Administration approved Keytruda for a subset of ovarian cancer patients - specifically adult patients with platinum-resistant epithelial ovarian, fallopian tube, or primary peritoneal carcinoma who express PD-L1. This approval adds to Keytruda's therapeutic reach even as patent expiry timelines approach.
Other broker actions reflect ongoing investor interest. Guggenheim raised its price target to $140 and kept a Buy rating following Merck's earnings report, despite the firm's observation that Merck's 2026 revenue guidance was below consensus. Bernstein adjusted its price target to $100 and retained a Market Perform rating while signaling optimism about the product pipeline and upcoming launches. BMO Capital increased its target to $135, pointing to potential extensions of Keytruda's patent protection. Wells Fargo likewise raised its price target to $135, though it emphasized weak 2026 guidance stemming from products facing loss of exclusivity.
Together, these analyst moves indicate a pattern of cautious optimism among research desks: while some firms flagged revenue guidance shortfalls and the near-term challenges of exclusivity losses, multiple houses nevertheless raised targets or affirmed potential value based on pipeline strength and strategic initiatives.
Investors weighing Merck now face a set of quantifiable data points - an elevated price-to-earnings multiple relative to near-term growth, a projected trough EPS higher than consensus, and a portfolio of acquisitions and approvals that Deutsche Bank believes will offset Keytruda declines. The market's treatment of these signals will determine whether the stock re-rates toward the $150 target or remains anchored by patent-expiry concerns.
Read more: Additional analysis and more than a dozen ProTips on Merck are available through the InvestingPro Pro Research Report.