Morgan Stanley analyst Terrance Flynn reiterated an Equalweight rating and $109.00 price target on Merck (NYSE: MRK)

The analyst commented, "We view the acquisition as encouraging and consistent with MRK’s prior commentary, which indicated a preference for acquisitions in the $1bn–$15bn range. The addition of TERN 701 also fits well with MRK’s growing hematology focused oncology pipeline, which includes nemtabrutinib (a non covalent BTK inhibitor for CLL/SLL), bomedemstat (an LSD1 inhibitor for myeloproliferative disorders), and zilovertamab vedotin (a ROR1 targeted ADC for lymphoid malignancies), all currently in Ph3 development, as well as earlier stage programs such as MK 1045 (CD19xCD3 T cell engager) in Ph1b for leukemia and lymphoma. The transaction further supports MRK’s strategy to position the company for growth beyond the Keytruda LOE through continued business development, alongside recent transactions such as Cidara, Verona and EyeBio, and ongoing progress across its internal pipeline (see HERE). On the call, mgmt reiterated its intent to remain active in BD in a disciplined manner, with oncology, particularly hematology, remaining a priority area, alongside immunology, cardiometabolic disease, vaccines, and ophthalmology."

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Shares of Merck closed at $116.37 yesterday.