We are increasing Merck's fair value estimate to $120 from $114 based on strong first-quarter results that ran ahead of our expectations combined with a pipeline that is progressing well.
Keytruda looks best positioned in the immuno-oncology landscape, buoyed by a first-mover advantage in the important indication of first-line non-small cell lung cancer.
Bears
Outside of immuno oncology, Merck needs to increase the number of late-stage pipeline drugs.
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Merck makes pharmaceutical products to treat several conditions in a number of therapeutic areas, including cardiometabolic disease, cancer, and infections. Within cancer, the firm's immuno-oncology platform is growing as a major contributor to overall sales. The company also has a substantial vaccine business, with treatments to prevent pediatric diseases as well as human papillomavirus, or HPV. Additionally, Merck sells animal health-related drugs. From a geographical perspective, just under half of the company's sales are generated in the United States.