tiprankstipranks
Merck: Monupilavir Could be Game Changer
Stock Analysis & Ideas

Merck: Monupilavir Could be Game Changer

Merck & Company (MRK) gained over 8% to close at $81.40 on October 1.

Merck is a biopharmaceutical firm whose main product is the PD-L1 inhibitor Keytruda, which treats melanoma. Keytruda accounts for a significant portion of the company’s sales, but Merck is looking for ways to diversify its product portfolio and decrease its reliance on the drug.

Merck’s share price has increased by only 11% in the last six months, but the latest statement regarding the new COVID-19 pill might be a game-changer for the business. (See Merck stock charts on TipRanks)

Why the Euphoria?

Merck announced positive Phase 3 results for a novel COVID-19 antiviral treatment on October 1.

Merck’s new antiviral therapy isn’t a COVID-19 vaccination. It’s a drug called Molnupiravir, which could be the first oral therapy for Covid, if authorized by regulatory bodies. The results showed that the drug can lower COVID-infected patients’ hospitalizations and deaths by 50%.

Based on the positive findings of its clinical trials, the healthcare behemoth plans to obtain Emergency Use Authorization for Molnupiravir from the Food and Drug Administration.

The development of a new oral medicine is unquestionably a turning moment in the fight against COVID-19, since the newer COVID variants have been a persistent source of concern among health professionals.

Furthermore, these new variants might boost Monupilavir demand in the future, possibly propelling Merck’s stock to new highs.

What Does This Mean for Other Biotech Stocks?

Merck’s news did not bode well for other vaccination stocks, like Moderna (MRNA), BioNTech (BNTX), and Novavax (NVAX).

Vaccine stocks fell while Merck’s stock price increased. Moderna’s stock fell over 11%, BioNTech was down almost 7%, and Novavax shares slid over 12% on Friday.

Investors are concerned that a successful new antiviral therapy would lower demand for vaccinations in the coming months, affecting vaccine makers as well as biotech firms that are developing their own COVID-19 therapies, as seen by the steep drop in pricing.

However, investors could be wrong here. While Merck’s oral tablet may not entirely remove the possibility of COVID-19 infection, vaccines may eventually result in the virus’s complete elimination.

In fact, health practitioners will need both choices to combat COVID-19 as effectively as possible; thus the price drop in vaccine stocks are likely temporary.

Analysts Weigh In

According to experts, oral therapy should be able to generate larger sales, which should benefit both the pharmaceutical company’s revenue and stock price.

Commenting bullishly on the trial results, Mizuho Securities analyst Mara Goldstein maintained a Buy rating on the stock and a price target of $100 (22.85% upside potential).

The trial results, according to the analyst, are noteworthy for MRK, since they may assist the firm to lessen its reliance on KEYTRUDA and diversify its revenue base.

Echoing a similar sentiment, Citigroup analyst Andrew Baum believes molnupiravir revenues “deserve a reasonable multiple,” given its effectiveness across known variations and prospective usage beyond COVID, into respiratory syncytial virus.

Furthermore, Baum expects worldwide orders of effective antivirals to surpass $20 billion globally, despite “consensus estimates currently approximating zero.”

The three-star analyst maintained a Buy rating on the stock and a price target of $105 (29% upside potential).

Wall Street’s Take

On TipRanks, Merck stock is a Moderate Buy. Out of 8 ratings, there are five Buy and three Hold recommendations.

The average MRK price target of $92 implies 13% upside potential to current levels.

Disclosure: On the date of publication, Shalu Saraf had no position in any of the companies discussed in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates, and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices or performance

Trending

Name
Price
Price Change
S&P 500
Dow Jones
Nasdaq 100
Bitcoin

Popular Articles