Deutsche warms to Merck; Ralph Lauren snags a buy rating: 4 big analyst picks

Investing.com — Here is your Pro Recap of the biggest analyst picks you may have missed since yesterday: a Buy initiation at Merck, and upgrades at Ralph Lauren, TopBuild, and Valaris.

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Merck started with a Buy rating at Deutsche Bank

Deutsche Bank initiated coverage on Merck (NYSE:MRK) with a Buy rating and a price target of $115.00, as reported in real time on InvestingPro.

Analysts noted that Merck's Keytruda drug has become a central element for oncology treatment regimens and is likely to continue being a growth driver until at least fiscal year 2028. They added that Keytruda's market performance indicates it may be a candidate for the Inflation Reduction Act in 2028, and also ensures Medicare volume.

"Keytruda’s already dominating despite lower priced competition and makes us believe biosimilar pressure may not be as bad as the Street expects," Deutsche analysts wrote. "Keytruda’s clinical data provides a moat that may widen with early-stage data and combinations."

Still, shares were down 1.4% to $102.92 in recent trading.

Ralph Lauren raised to Buy following fiscal Q2

CFRA upgraded Ralph Lauren (NYSE:RL) to Buy from Hold and raised its price target to $135.00 from $120.00 following the company’s reported fiscal Q2 EPS beat.

Revenues in North America saw a slight decline of 1% year over year during the clothing brand's Q2, while Europe experienced growth of 7% and Asia was up 10%, aided by China's economic reopening. Ralph Lauren also said its gross margin rose 80 basis points year over year to 65.4%, driven by higher average unit retail prices, reduced freight costs, and a favorable channel and geographic mix.

“RL's balance sheet remains strong, with $1.5B in cash and equivalents and $1.1B in total debt," wrote CFRA analysts. "The company reiterated its full-year guidance of low-single-digit revenue growth. We raise our opinion after a 15% decline from its August peak and believe the company continues to execute at a high level with a strong balance sheet."

Ralph Lauren shares rose more than 3% Wednesday on the earnings print, and were up another 0.8% to $117.45 in recent Thursday trading.

Two more upgrades

Evercore ISI upgraded Topbuild (NYSE:BLD) to Outperform from In Line and raised its price target to $368.00 from $308.00.

Barclays upgraded Valaris (NYSE:VAL) to Overweight from Equalweight and raised its price target to $106.00 from $84.00.

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