Investors can expect further gains from Merck this year, Bank of America said. Analyst Geoff Meacham upgraded shares to buy from neutral, saying the pharmaceutical company will continue to outperform even as macro pressures mount in 2023. "We are upgrading MRK to Buy from Neutral based on continuation of strong growth trends seen last year (2023-25 revenue CAGR 6% vs. 1% Biopharma peers) and substantial progress diversifying the Keytruda LOE / concentration risk," Meacham wrote in a Wednesday note. "Indeed, at a time where the macro backdrop could remain uncertain throughout most of 2023, Merck's consistent revenue upside (1Q22: +$1.3B; 2Q22: +$751M; 3Q22: +$490M) should be highly valued, in our view," Meacham added Merck shares jumped roughly 45% in 2022, as investors more broadly pivoted into health care names for defensive positioning in their portfolios. Merck's core business in Keytruda continued to show strong performance, and it has several strategies in place for the loss of exclusivity. Loss of exclusivity is the set amount of time a pharmaceutical company can legally develop, sell and market a treatment. Keytruda is expected to be greater than 45% of Merck's total revenue in 2025, according to the note. The company has hundreds of combination programs in development, according to the note. "We think meaningful BD is still required to overcome Merck's tough growth trajectory post 2027, but the company has developed a strategy and has time to execute on BD deals," read the note. Shares of Merck could see upside of about 17% to the analyst's price objective. The analyst raised his target to $130 from $110. The stock is up more than 1% in Wednesday premarket trading. Separately, Bank of America downgraded shares of competitor Pfizer to neutral from buy, citing the magnitude of the revenue decline when the pharma company loses the right to develop and sell Covid-19 vaccine Comirnaty and antiviral pill Paxlovid in 2023. The firm expects a $32 billion loss, compared to consensus expectations of $25 billion, according to the note. "Our previous Buy thesis was centered on Comirnaty/Paxlovid driving robust cash flow earmarked for BD, but as total COVID-19 revenues erode, there is less available for BD and at a time where new product growth looks less certain," Meacham wrote in a Wednesday note. "Overall, while we appreciate Pfizer's ability to still carry out substantial BD, we suspect that a share re-rating (currently 11X 2023 estimates vs. peers: 18X) will be driven by upside from new product launches, which is not likely to materialize in 2023," Meacham added. The analyst maintained a $60 price target, implying 17% upside from Tuesday's closing price. Shares were down more than 1% in Wednesday premarket trading. —CNBC's Michael Bloom contributed to this report.