Bond.az reports that Jefferies has initiated coverage of Merck KGaA with a Hold rating and a price target of €129.
Analysts said the German science and technology group's shares already reflect key growth opportunities and near-term challenges.
Jefferies said Merck's valuation appears balanced, with investors already recognizing the company's exposure to structural growth areas including life sciences, semiconductor materials, and rare diseases.
The investment firm sees a balanced risk-reward profile and is awaiting greater visibility on future catalysts before becoming more constructive on the stock.
Jefferies identified Merck's Life Science division as its primary growth engine, citing exposure to bioprocessing and consumables.
It expects the business to benefit from recovering biologics demand and forecasts Life Science revenue growth broadly in line with management's medium-term targets.
In Electronics, Jefferies said Merck remains well-positioned to benefit from long-term demand for semiconductor materials tied to artificial intelligence and advanced chip manufacturing.
The firm forecasts mid- to high-single-digit growth for the segment.
Jefferies also expects Merck's Healthcare division to return to modest growth, supported by its rare disease portfolio and recent product launches.
However, it noted that declines in some mature healthcare businesses could continue to weigh on near-term performance.
The firm forecasts group revenue growth of 4.7% annually between 2025 and 2029, broadly in line with the company's medium-term guidance.
It also expects adjusted EBITDA margins to improve to about 30% over the period, driven primarily by operational leverage in the Life Science business.
Jefferies' €129 price target implies limited upside from current levels, leading the firm to maintain a neutral stance on the shares.
