RBC Capital has opened coverage on Merck & Co. (NYSE: MRK) with an outperform rating and assigned a price target of $142.00. The firm framed its call around improving sentiment as the company transitions beyond prior Gardasil-related concerns and as the visibility into several late-stage programs increases.
RBC highlighted two specific programs as driving that visibility: Merck's oral PCSK9 candidate and the CADENCE program. According to the analyst note, those pipeline elements, along with anticipated near-term product launches and Phase 3 data readouts, are expected to underpin rising investor interest over the next 12 to 18 months and could prompt upward revisions to consensus estimates.
The research team acknowledged the market's ongoing worry about Keytruda, Merck's flagship oncology drug, losing exclusivity in late 2028. Despite that concern, RBC pointed to ongoing de-risking efforts and management's historical execution as reasons to be confident in a resumption of growth in the early 2030s.
RBC also projects multiple expansion for the stock as the company channels cash flow into research and development and pursues potential mergers and acquisitions during 2026. The firm sees that capital deployment pathway as a means to bridge the company through Keytruda's patent expiration and to reignite revenue growth thereafter.
Corporate developments at Merck accompany the analyst activity. The company reorganized its Human Health business into two separate units and named Jannie Oosthuizen as executive vice president and president of Oncology and MSD International. The restructuring is intended to simplify operations within the business.
On the regulatory front, Merck received approval from the U.S. Food and Drug Administration for Keytruda and Keytruda Qlex for use in certain ovarian cancer patients, a development that adds to the company's oncology portfolio.
Other broker activity has recently been active on Merck. Deutsche Bank upgraded the stock to Buy and raised its price target to $150, citing potential growth following Keytruda's loss of exclusivity. Barclays initiated coverage with an overweight rating, noting expected product launches and clinical trial outcomes in 2026 as positive drivers.
Separately, Merck entered into a collaboration with the Mayo Clinic to apply artificial intelligence to drug discovery, combining Mayo Clinic clinical insights with Merck's AI capabilities in discovery work. That partnership was cited as part of the company's broader innovation efforts.
Investors and market observers will likely focus on several near-term checkpoints: progress on the oral PCSK9 and CADENCE programs, timing and outcomes of product launches, Phase 3 readouts, and management's use of cash flow for R&D and potential acquisitions in 2026. These items will factor into how analysts and the market reassess Merck's prospects as Keytruda approaches its late-2028 loss of exclusivity.
Summary
RBC Capital initiated Merck at outperform with a $142.00 price target, citing improved sentiment after Gardasil concerns and increased pipeline clarity from oral PCSK9 and CADENCE programs. The firm expects rising enthusiasm over 12 to 18 months from launches and Phase 3 readouts, while acknowledging Keytruda's late-2028 loss of exclusivity risk and expressing confidence in a return to growth in the early 2030s.
Key points
- RBC initiated coverage at outperform and set a $142.00 price target, citing pipeline visibility and improving sentiment.
- Near-term launches and Phase 3 readouts could drive consensus upgrades over the next 12-18 months; this affects healthcare and biotech investors and equity markets for pharmaceutical names.
- Other analyst moves include Deutsche Bank upgrading to Buy with a $150 target and Barclays initiating coverage at overweight, reflecting broad analyst interest in Merck's post-Keytruda trajectory.
Risks and uncertainties
- Keytruda faces loss of exclusivity in late 2028 - an event the market is concerned about and that could pressure near-term revenue for Merck and influence pharmaceutical sector valuations.
- Outcomes of near-term launches and Phase 3 readouts are uncertain; if results do not meet expectations, consensus upgrades anticipated by RBC may not materialize, affecting biotech and clinical-stage investment sentiment.
- RBC's view assumes management will deploy cash flow into R&D and pursue potential mergers and acquisitions through 2026; execution risk around that strategy could affect the company's ability to offset Keytruda's patent expiration impact.