Merck Sees Path Beyond Keytruda Cliff as Price Target Rises to $150
Deutsche Bank raised its price target on Merck from $115 to $150 and upgraded the stock to Buy, citing a clear transition plan for Keytruda’s patent expiration. Merck projected 2026 revenue of $65.5–67.0 billion with a $2.5 billion headwind from generics, Medicare price negotiations and lower COVID-19 treatment sales.
1. Deutsche Bank Upgrade and Price Target Increase
Merck & Co. received a Buy upgrade from Deutsche Bank, with the price target increased to $150 from $115. Analyst James Shin highlighted market undervaluation and a clear path to manage Keytruda’s upcoming patent expiration.
2. 2026 Revenue Forecast and Identified Headwinds
Merck projected 2026 revenue of $65.5 billion to $67.0 billion, below consensus estimates of $67.6 billion. The company flagged a $2.5 billion headwind from generic competition, Medicare price negotiations and lower sales of its COVID-19 treatment, Lagevrio.
3. Strong Fourth Quarter Performance
In the fourth quarter, Merck beat both profit and sales forecasts, driven primarily by continued demand for Keytruda and robust operational execution across its pharmaceutical portfolio.
4. Growth Drivers Beyond Keytruda
Excluding Keytruda, Merck identified multiple visible growth drivers and noted a trough earnings formation, underscoring potential upside from new product launches and pipeline assets to support future earnings growth.