RBC Capital downgraded Merck & Co. (MRK) to "Sector Perform" from "Outperform." The firm cited valuation concerns after the stock's recent surge. RBC simultaneously raised its price target on the pharmaceutical giant to $150 from $142.
The stock's price increased following positive Phase 3 trial results for its personalized cancer vaccine. Merck co-developed the vaccine with Moderna.
RBC analyst Trung Huynh called the current valuation "unprecedented." Merck faces the patent expiration of its blockbuster drug, Keytruda, in two years. Huynh expects only modest near-term growth.
RBC's action contrasts with other Wall Street firms. Morgan Stanley and Bank of America, for example, upgraded Merck or raised their price targets. These firms based their decisions on promising vaccine data, which they believe will help offset upcoming Keytruda revenue loss.