It was a strong day for pharmaceutical company Merck on Wednesday.
The stock’s shares started to fly after it was upgraded by Citi analysts from “neutral” to “buy.”
The analysts noted that stronger sales from the company’s Keytruda drug, an immunotherapy used in cancer treatments, are expected. Along with the upgrade, the firm also upped their price target on Merck from $65 to $72 a share.
According to Citi analyst Andrew Baum, “Merck’s success with Keytruda has clearly outperformed our initial expectations which were based on Merck’s historic absence as a major oncology player.”
The firm has increased its peak sales forecast on Keytruda from $9 billion to $16 billion.
“While competitors have clearly sought to learn from Merck, the breadth and depth of Keytruda’ s clinical trial program and boldness to commit significant capital to promising external modalities … gives it a likely sustained significant advantage, we believe,” Baum wrote in his note to clients.
Next to Tuesday’s closing price of $63.22, the Citi price target of $72 is roughly a 13% premium.
Disclaimer: We have no position in Merck & Co., Inc. (NYSE: MRK) and have not been compensated for this article.