Merck KGaA’s shares declined 1.45% to €136.35 on Thursday, underperforming Germany’s DAX index, which was down about 0.8%. The move followed UBS’s downgrade of the stock to Neutral from Buy, citing a valuation that has caught up with fair value amid rising risks in the company’s Healthcare division.
UBS maintained its price target at €150 but raised its 2026 core earnings per share estimate by 3% to €8.27. The firm also lowered its sales forecasts for 2027 through 2031, projecting figures 2% to 4% below the S&P Global Visible Alpha consensus over that period.
The downgrade reflects concerns over increasing competitive pressures, particularly in Merck’s high-margin Mavenclad franchise, which faces growing generic competition. UBS also highlighted risks to revenue from the planned 2030 launch of a biosimilar version of Erbitux by Sandoz, a Novartis unit.
Additional pressures include potential competition for Ogsiveo, a specialty oncology drug acquired through the SpringWorks purchase, from Immunome’s rival drug varegacestat. UBS noted that varegacestat demonstrated a higher placebo-adjusted response rate in a Phase 3 study and offers once-daily dosing, which could erode Ogsiveo’s market position.
UBS also flagged the risk of a negative FDA decision on Pergoveris in the second half of 2026 and a potential FDA ruling in April 2027 regarding varegacestat. The stock had gained 32% over the past 12 months and 18% year-to-date, according to UBS, but the recent rally has reduced its margin of safety.
