Merck has a lot to offer investors looking for low-risk buys in the pharmaceutical sector, according to Berenberg. The firm on Tuesday upgraded shares of the company to buy from hold and raised its price target to $100 from $95. That implies shares could gain nearly 17% from where they currently trade. "For investors seeking a low-risk value option in the pharma sector, we believe Merck & Co offers many attractions: medium-term growth just ahead of the sector average, limited patent expiry burden, low exposure to US price reform, margin expansion and no litigation overhang," wrote analyst Luisa Hector. One feather in Merck's cap is Keytruda, a cancer drug. So far, management has invested successfully in the drug, according to Hector. Going forward, however, management will have a challenge in continuing to drive returns for the drug. Still, the market may be underestimating the future of the treatment. "Progress in oncology has also been mixed but competitors have met a similar fate," wrote Hector. "Lifecycle extensions for Keytruda (subcutaneous form, fixed combinations) are likely underestimated by the market; positive returns can be achieved through the company maximizing Keytruda's time/data advantage and avoiding excess, defensive R & D spend." Merck also has the potential to raise and invest significant cash to grow going forward. The company has about $41 billion available for external deals from 2022 to 2026 before it needs to raise debt or issue equity, according to Berenberg estimates. And, the company could raise $52 billion before hitting a 3 times leverage ratio. "This firepower, from the strong mid-term growth profile, means the company is well positioned to bolster its top line from external sources," said Hector. "We would like the business to execute deals in oncology and vaccines – areas which warrant a premium rating, in our view." The upgrade comes the same day Berenberg downgraded shares of Bristol-Myers Squibb, citing limited upside for the company. —CNBC's Michael Bloom contributed reporting.