The latest Market Talks covering the Health Care sector. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.

0650 ET - Merck KGaA anticipates its research and development costs will normalize to industry-peer levels as its pipeline advances and recent deals mature, Chief Executive Officer Belen Garijo says in a media call. The life-sciences and electronics company's R&D spending was 2.3 billion euros in 2024, and it expects it to gradually increase in 2025. Garijo reaffirms Merck's strategy to bolster in-licensing--agreements to use another company's products--and consider smaller mergers and acquisitions to strengthen its pipeline. Merck is looking for new assets as one of its key growth drivers, multiple sclerosis drug Mavenclad, will face patent expiry in 2026. The German company's goal is to achieve a 50-50 split between internal and external innovation for future product launches, Garijo adds. Shares are up 1.6% at 139.30 euros. (helena.smolak@wsj.com)

0618 ET - Merck KGaA should see a minimal impact from U.S. import tariffs on its business, its chief executive officer, Belen Garijo, says in a call with reporters, alongside its annual results. Germany's Merck doesn't see an impact from U.S. tariffs imposed on Canada and Mexico, but a limited impact from those on China, Garijo says, emphasizing the regionalization of the company's supply chain. Shares are up 1.5% at 139.20 euros. (helena.smolak@wsj.com)

0614 ET - Merck KGaA's quantitative forecast instead of the usual qualitative outlook indicates greater management transparency, Stifel analysts say in a note. However, Stifel analysts still classify the German pharmaceutical-and-chemicals company's 2025 forecast, which is broadly in line with consensus, as relatively unambitious and conservative due to its wide range. This should dampen enthusiasm, they say. Shares are up 3.5% at 141.70 euros. (helena.smolak@wsj.com)

0320 ET - Merck KGaA's earnings guidance is cautious as the company is waiting for a wider semiconductor market recovery, Jefferies analysts say in a note. The German life-sciences and electronics company's 4Q Ebitda before one-off items and sales were in line with consensus, they say. Beats in its healthcare segment were seen from metastatic cancer drug Erbitux and diabetes treatments Glucophage. Multiple sclerosis drug Mavenclad was in line but cancer drug Bavencio and fertility injection Gonal-f missed expectations, the analysts say. Shares rise 1.5% to 139.15 euros. (helena.smolak@wsj.com)

0133 ET - The use of AI in China's healthcare sector is nascent and expected to contribute up to only 2.5% of incremental revenue to the country's pharmaceutical and healthcare-services sector by 2028, HSBC Qianhai's Linda Shu says in a note. However, with major players like Tencent, Alibaba and JD.com entering the space, AI's impact is growing given its use in saving costs and addressing resource shortages, says the head of China healthcare research. In the near term, breakthroughs in medical imaging, diagnostics and hospital management could drive AI adoption, while in the long term, smart hospitals and personalized care may become mainstream, she says. Pharmaceutical companies, medical-device manufacturers and agile startups are well-positioned to capture market share by building AI-driven ecosystems and forging strategic partnerships, she adds. (monica.gupta@wsj.com)

1841 ET - Cochlear's new bull at Citi sees no cause for concern in slowing sales at the hearing-implant maker. Raising his recommendation to buy from neutral, analyst Mathieu Chevrier tells clients in a note that the company is simply seeing the usual slowdown in sales ahead of the launch of its next sound processor model. He isn't worried that the economics of processor upgrades are changing. Chevrier contends that the stock's current valuation at 36 times fiscal 2026 earnings, compared with a historical average of 39, offers a good entry point. Citi lifts its target price 3.4% to A$300.00. Shares are up 1.4% at A$266.98. (stuart.condie@wsj.com)

1809 ET - ResMed gets a new bull at Citi, where analyst Mathieu Chevrier points to the breathing-tech maker's strong EPS growth, free cash-flow and balance sheet. Raising his recommendation on ResMed's Australia-listed stock to buy from neutral, Chevrier values the company at 24 times projected fiscal 2026 earnings, in line with its pre-Covid average. Its current valuation of 22 times fiscal 2026 earnings therefore looks reasonable, he writes in a note. He points out that ResMed has seen little impact from the roll-out of new weight-loss drugs, and sees risks associated with such treatments being continuously pushed back. Citi lifts its target price 7.3% to A$44.00. Shares are at A$36.92 ahead of the open. (stuart.condie@wsj.com)

1237 ET - Jazz Pharmaceuticals' move to buy Chimerix could be the start of deal-making by the biopharma, analysts at Piper Sandler say. Piper's David Amsellem and Alex von Riesemann say the $935 million deal is a sensible and targeted use of capital that doesn't get in the way of Jazz's ability to execute on additional M&A and doesn't entail Jazz taking on development risk. Piper notes that Jazz management has previously touted capacity for a multi-billion-dollar transaction or series of deals, and the analysts say they would like to see Jazz turn its attention to bolstering its epilepsy franchise. Jazz up 2% to $141.67. (colin.kellaher@wsj.com)

(END) Dow Jones Newswires

March 06, 2025 12:20 ET (17:20 GMT)

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