Morgan Stanley Upgrades Merck, Cuts Liberty LiLAC, and Flags 38-Gigawatt AI Power Gap in Busy Research Day

Morgan Stanley issued a flurry of analyst calls on August 20. Most notably, the firm upgraded Merck from Equal-Weight to Overweight with a price target of $179, arguing that a strong cancer drug pipeline, bolstered by a blockbuster late-stage trial showing the combination of Moderna's intismeran autogene and Merck's Keytruda effective in high-risk melanoma patients, more than offsets the looming patent expiration of Keytruda. On the same day, RBC Capital Markets moved in the opposite direction, downgrading Merck to Sector Perform with a $150 target.

Morgan Stanley separately downgraded Liberty LiLAC from Equal-Weight to Underweight with a $7 price target on valuation concerns, while resuming coverage of Keurig Dr Pepper at Overweight. The firm's analysts also published a note warning that AI data centers face a 38-gigawatt power gap, identifying industrial stocks such as GE Vernova as beneficiaries of surging power generation demand. Morgan Stanley's head of global real assets, Lauren Hochfelder, echoed that theme on CNBC, calling industrial real estate a side-door way into AI.

Separately, Morgan Stanley set a bullish 12-month price target on SpaceX even as the stock fell roughly 6% on August 20 after 319 million shares held by early employees and investors were unlocked. The firm also published a constructive gold price outlook for 2027, flagged modest downside risks to the US aluminum premium, said Apple App Store net revenues dipped year-over-year based on monthly data, noted that BILL's fiscal 2027 outlook points to slower core growth despite a fourth-quarter profit gain, and assessed the broader earnings season positively, concluding that profits grew, margins held, and gains were broad-based rather than concentrated among a handful of large names. In India, shares of Power Finance Corporation and REC fell as much as 3% following a Morgan Stanley downgrade of both stocks.