Merck KGaA: shares drop after UBS downgrade

(CercleFinance.com) - Merck KGaA shares slumped almost 3% on Tuesday after UBS downgraded the German group's rating to "sell".


In a note to clients, the brokerage pointed out that Merck KGaA shares are up almost 50% year-to-date, having outperformed the European pharma sector by about 30%.

"This has largely been driven by Merck's LifeScience division that benefits significantly from the manufacturing need of COVID-19 vaccines at the moment," UBS wrote in the research note, adding that the COVID tailwinds may be fading.

As the company's valuation is currently at a premium to its sum-of-the-parts, the broker said it sees downside, and downgrades the stock from "neutral" to "sell", setting a new price target of 170 euros.

Merck shares were down 2.8% in morning trading, the biggest losers on Germany's DAX index.

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