Merck Gets Overweight Rating with $140 Target, Eyes 2026 Launch Catalysts and Business Split
Barclays initiated coverage of Merck with an Overweight rating and $140 price target, citing 2026’s “first-in-class” drug launches and key data readouts as catalysts for earnings upside and multiple expansion. The company plans a two-unit split to separate its cancer arm, led by Keytruda (45% of revenue), from non-cancer products.
1. Barclays Coverage Initiation
On February 20, Barclays began coverage of Merck with an Overweight rating and set a $140 price target, highlighting expectations of multiple first-in-class launches and pivotal data readouts in 2026 that could drive both earnings growth and valuation expansion.
2. Strategic Business Split
Merck plans to divide its main pharmaceutical unit into two distinct businesses: a cancer-focused arm anchored by Keytruda, which generates nearly half of current revenue, and a non-cancer arm encompassing vaccines and other therapies to diversify revenue streams.
3. Pipeline Expansion and Risk Mitigation
To offset Keytruda’s anticipated 2028 patent expiration, Merck is pursuing over 20 new launches or label expansions and has acquired biotech assets such as the lung disease treatment Winrevair, aiming to bolster its pipeline and sustain long-term growth.