NEW YORK (TheStreet) -- Merck's  (MRK) - Get Reportinvestors "under-appreciate" the stock, Bernstein said in a note cited by Barron's on Wednesday.

In June, Merck's lung cancer drug Keytruda met its primary endpoint in a clinical trial while rival drugmaker Bristol-Myers Squibb's (BMY) similar treatment failed in August.

Bernstein noted that the company could have durability and value as a leader in the market for first-line lung cancer treatments, depending on "how smart Merck plays its hand from here."

The firm added that analysts frequently criticize the Kenilworth, NJ-based global healthcare company based on its combination strategy, which is less clear than peers like Bristol-Myers's.

"This is too simplistic of a view, in our opinion," Bernstein said, according to Barron's.

The firm noted that the company has already invested in chemotherapy combinations with initiation of trials for the Keynote-189 and Keynote-407. Also, Bernstein said "the chances are high" that the company will enter a phase III development program soon.

Shares of Merck were fluctuating in mid-afternoon trade on Wednesday.

Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.

TheStreet Ratings rated this stock as a "buy" with a ratings score of A-.

The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

You can view the full analysis from the report here: MRK

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