BMO Capital Markets Downgrade of Merck & Company Inc

BMO Capital Markets has downgraded Merck & Company Inc (NYSE: MRK) from outperform to market perform, citing concerns over its Gardasil franchise in China. They express uncertainty about filling the revenue gap as Keytruda faces loss of exclusivity and competition from biosimilars.

The brokerage reduced its price target for Merck to $105, highlighting a lack of near-term catalysts, which suggests that the stock may remain range-bound over the next year.

BMO observed that recent sell-offs in Merck shares reflect rising skepticism in the pharmaceutical sector, with investors favoring more stable options. Although Merck has made strides in addressing challenges after 2028, further clarity is essential to regain investor confidence.

In addition, BMO also downgraded Biogen Inc (NASDAQ: BIIB) from outperform to market perform, noting slower-than-expected revenue growth for its Alzheimer’s drug Leqembi, as well as erosion in its multiple sclerosis business and decreased growth in its rare disease portfolio.

The price target for Biogen has been cut to $164, with limited near-term opportunities for high-value catalysts while the company resolves these challenges. BMO acknowledged management’s efforts for a turnaround but sees little upside for the stock in the near term as these issues are addressed.