Shares of pharmaceutical giant Merck (MRK) - Get Report gained on Wednesday after Mizuho Securities initiated coverage on the company with a buy rating and a 12-month price target of $97 a share, roughly 13% above its current trading level.

In a note to clients, Mizuho Securities analyst Mara Goldstein highlighted how the company's Keytruda cancer-fighting drug is driving Merck's "dominance in immuno-oncology."

"We include Merck in our oncology-centric universe given its dominance in immuno-oncology, driven by Keytruda," she said. "The company is larger than Keytruda but, in essence, the drug is too big to ignore, and that drives our thesis."

Keytruda is one of Merck's key cancer-fighting drugs that falls among a class of medicines called PD-1 inhibitors used to fight certain types of cancers.

Merck in May announced a setback in its Keytruda treatment trials, announcing that it did not meet the main goal of helping patients with triple negative breast cancer live longer when compared to chemotherapy.

Keytruda, which brought in sales of $2.27 billion for the company in the first quarter, has U.S. approval for other forms of cancer including skin and lung cancer.

Merck reports its second-quarter earnings on July 30. Analysts polled by FactSet are currently expecting per-share earnings of $1.16.

Shares of Merck were up about 1% at $86.34 in morning trading on the New York Stock Exchange.