Investment bank Wolfe Research upgraded its rating on Merck (MRK.US) from "Peer Perform" to "Outperform," setting a price target of $135. According to the firm's analyst, Alexandria Hammond, Merck is well-positioned to manage the impending loss of market exclusivity for the intravenous version of its blockbuster cancer drug, Keytruda. Based on feedback from physicians, the analyst projects that by 2029, Merck will successfully convert 41% of the intravenous Keytruda revenue to its newly approved subcutaneous version, Qlex. Consequently, she has raised her revenue forecast for the Keytruda product line in 2030 to $6 billion above the current market consensus. Furthermore, the analyst believes that, bolstered by recent merger and acquisition activities—including the purchase of antiviral drug developer Cidara Therapeutics—Merck is entering a phase rich with catalysts and is "poised for breakthrough performance driven by earnings-accretive M&A." It is noteworthy that Merck is reportedly in discussions to acquire the cancer-focused biotechnology company Revolution Medicines (RVMD.US). Citing sources familiar with the matter, the report indicated that the potential transaction is being discussed within a price range of $28 billion to $32 billion. If finalized, this deal would rank among the largest in the pharmaceutical industry since Pfizer (PFE.US) acquired Seagen for $43 billion in late 2023. Since 2021, Merck's late-stage pipeline has grown nearly threefold, driven by internal development and significant deals, such as the $11.5 billion acquisition of Acceleron's pulmonary hypertension drug, Winrevair. A transaction with Revolution Medicines could grant Merck access to its experimental drug, Daraxonrasib. In a separate move, Wolfe Research downgraded its rating on AbbVie (ABBV.US) from "Outperform" to "Peer Perform" and removed its previous $275 price target for the stock. The analyst contends that the company's stock price already fully reflects the strong performance of its next-generation immunology products, Skyrizi and Rinvoq. Following the patent cliff for its blockbuster arthritis drug Humira, these two products have become the dominant forces within AbbVie's immunology and inflammation portfolio.
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