Merck (MRK)
Market Price (3/30/2026): $119.5 | Market Cap: $296.5 BilSector: Health Care | Industry: Pharmaceuticals
Merck (MRK)
Market Price (3/30/2026): $119.5Market Cap: $296.5 BilSector: Health CareIndustry: Pharmaceuticals
Investment Highlights Why It Matters Detailed financial logic regarding cash flow yields vs trend-riding momentum.
| Attractive yieldTotal YieldTotal Yield = Earnings Yield + Dividend Yield, Earnings Yield = Net Income / Market Cap Dividend Yield = Total Dividends / Market Cap is 8.9%, Dividend Yield is 2.8%, ERPEquity Risk Premium (ERP) = Total Yield - Risk Free Rate, Reflects the premium above risk free assets offered by the investment. is 5.1% | Trading close to highsDist 52W High is -2.8%, Dist 3Y High is -4.6% | Key risksMRK key risks include [1] the impending 2028 patent expiration of its blockbuster drug, Show more. |
| Attractive operating marginsOp Mgn LTMOperating Margin = Operating Income / Revenue Reflects profitability before taxes and before impact of capital structure (interest payments). is 34% | Weak multi-year price returns2Y Excs Rtn is -19%, 3Y Excs Rtn is -36% | |
| Attractive cash flow generationCFO/Rev LTMCash Flow from Operations / Revenue (Sales), Last Twelve Months (LTM) is 25%, FCF/Rev LTMFree Cash Flow / Revenue (Sales), Last Twelve Months (LTM) is 19%, CFO LTM is 16 Bil, FCF LTM is 12 Bil | ||
| Low stock price volatilityVol 12M is 29% | ||
| Megatrend and thematic driversMegatrends include Biotechnology & Genomics, Precision Medicine, and Aging Population & Chronic Disease. Themes include Biopharmaceutical R&D, Show more. |
| Attractive yieldTotal YieldTotal Yield = Earnings Yield + Dividend Yield, Earnings Yield = Net Income / Market Cap Dividend Yield = Total Dividends / Market Cap is 8.9%, Dividend Yield is 2.8%, ERPEquity Risk Premium (ERP) = Total Yield - Risk Free Rate, Reflects the premium above risk free assets offered by the investment. is 5.1% |
| Attractive operating marginsOp Mgn LTMOperating Margin = Operating Income / Revenue Reflects profitability before taxes and before impact of capital structure (interest payments). is 34% |
| Attractive cash flow generationCFO/Rev LTMCash Flow from Operations / Revenue (Sales), Last Twelve Months (LTM) is 25%, FCF/Rev LTMFree Cash Flow / Revenue (Sales), Last Twelve Months (LTM) is 19%, CFO LTM is 16 Bil, FCF LTM is 12 Bil |
| Low stock price volatilityVol 12M is 29% |
| Megatrend and thematic driversMegatrends include Biotechnology & Genomics, Precision Medicine, and Aging Population & Chronic Disease. Themes include Biopharmaceutical R&D, Show more. |
| Trading close to highsDist 52W High is -2.8%, Dist 3Y High is -4.6% |
| Weak multi-year price returns2Y Excs Rtn is -19%, 3Y Excs Rtn is -36% |
| Key risksMRK key risks include [1] the impending 2028 patent expiration of its blockbuster drug, Show more. |
Qualitative Assessment
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1. Strong Fourth-Quarter 2025 Earnings Exceeding Expectations and Optimistic 2026 Financial Guidance.
Merck reported robust financial results for the fourth quarter of 2025, with worldwide sales reaching $16.4 billion, reflecting a 5% increase and surpassing analyst estimates. The company's non-GAAP earnings per share (EPS) stood at $2.04, beating the consensus estimate of $2.01 to $2.03 per share. For the full year 2025, sales reached $65.0 billion. Furthermore, Merck provided an encouraging outlook for full-year 2026, projecting worldwide sales between $65.5 billion and $67.0 billion and non-GAAP EPS between $5.00 and $5.15. This positive financial performance and forward-looking guidance instilled investor confidence.
2. Significant Pipeline Advancements and Strong Performance of Recently Launched Products.
Merck's stock benefited from notable progress in its clinical pipeline and the successful uptake of new medicines. The company announced positive late-stage trial results from 18 Phase 3 trials in 2025. Key new product contributions included WINREVAIR, a pulmonary arterial hypertension drug, which recorded $1.4 billion in full-year 2025 sales and $467 million in the fourth quarter of 2025, and CAPVAXIVE, a new pneumococcal conjugate vaccine, which generated $759 million in sales for the full year 2025. Additionally, the FDA approved Keytruda and its subcutaneous formulation, Keytruda Qlex, for certain ovarian cancer patients, further expanding its oncology portfolio. Merck's Phase III pipeline has nearly tripled since 2021, with expectations for approximately 20 new drug and vaccine launches in the coming years, many with blockbuster potential.
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Stock Movement Drivers
Fundamental Drivers
The 15.9% change in MRK stock from 11/30/2025 to 3/29/2026 was primarily driven by a 20.2% change in the company's P/E Multiple.| (LTM values as of) | 11302025 | 3292026 | Change |
|---|---|---|---|
| Stock Price ($) | 103.18 | 119.63 | 15.9% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 64,235 | 65,011 | 1.2% |
| Net Income Margin (%) | 29.6% | 28.1% | -5.2% |
| P/E Multiple | 13.5 | 16.3 | 20.2% |
| Shares Outstanding (Mil) | 2,495 | 2,481 | 0.6% |
| Cumulative Contribution | 15.9% |
Market Drivers
11/30/2025 to 3/29/2026| Return | Correlation | |
|---|---|---|
| MRK | 15.9% | |
| Market (SPY) | -5.3% | 14.0% |
| Sector (XLV) | -8.7% | 60.0% |
Fundamental Drivers
The 45.9% change in MRK stock from 8/31/2025 to 3/29/2026 was primarily driven by a 29.6% change in the company's P/E Multiple.| (LTM values as of) | 8312025 | 3292026 | Change |
|---|---|---|---|
| Stock Price ($) | 81.98 | 119.63 | 45.9% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 63,616 | 65,011 | 2.2% |
| Net Income Margin (%) | 25.8% | 28.1% | 8.9% |
| P/E Multiple | 12.5 | 16.3 | 29.6% |
| Shares Outstanding (Mil) | 2,510 | 2,481 | 1.2% |
| Cumulative Contribution | 45.9% |
Market Drivers
8/31/2025 to 3/29/2026| Return | Correlation | |
|---|---|---|
| MRK | 45.9% | |
| Market (SPY) | 0.6% | 14.4% |
| Sector (XLV) | 5.2% | 69.6% |
Fundamental Drivers
The 35.6% change in MRK stock from 2/28/2025 to 3/29/2026 was primarily driven by a 24.8% change in the company's P/E Multiple.| (LTM values as of) | 2282025 | 3292026 | Change |
|---|---|---|---|
| Stock Price ($) | 88.25 | 119.63 | 35.6% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 64,168 | 65,011 | 1.3% |
| Net Income Margin (%) | 26.7% | 28.1% | 5.3% |
| P/E Multiple | 13.0 | 16.3 | 24.8% |
| Shares Outstanding (Mil) | 2,526 | 2,481 | 1.8% |
| Cumulative Contribution | 35.6% |
Market Drivers
2/28/2025 to 3/29/2026| Return | Correlation | |
|---|---|---|
| MRK | 35.6% | |
| Market (SPY) | 9.8% | 29.3% |
| Sector (XLV) | -2.1% | 73.9% |
Fundamental Drivers
The 24.3% change in MRK stock from 2/28/2023 to 3/29/2026 was primarily driven by a 14.6% change in the company's Net Income Margin (%).| (LTM values as of) | 2282023 | 3292026 | Change |
|---|---|---|---|
| Stock Price ($) | 96.24 | 119.63 | 24.3% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 59,283 | 65,011 | 9.7% |
| Net Income Margin (%) | 24.5% | 28.1% | 14.6% |
| P/E Multiple | 16.8 | 16.3 | -3.2% |
| Shares Outstanding (Mil) | 2,535 | 2,481 | 2.2% |
| Cumulative Contribution | 24.3% |
Market Drivers
2/28/2023 to 3/29/2026| Return | Correlation | |
|---|---|---|
| MRK | 24.3% | |
| Market (SPY) | 69.4% | 19.9% |
| Sector (XLV) | 18.4% | 59.9% |
Price Returns Compared
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | Total [1] | |
|---|---|---|---|---|---|---|---|
| Returns | |||||||
| MRK Return | 2% | 49% | 1% | -6% | 10% | 14% | 80% |
| Peers Return | 36% | 15% | -3% | 12% | 24% | 3% | 118% |
| S&P 500 Return | 27% | -19% | 24% | 23% | 16% | -5% | 72% |
Monthly Win Rates [3] | |||||||
| MRK Win Rate | 42% | 67% | 42% | 33% | 50% | 67% | |
| Peers Win Rate | 62% | 63% | 40% | 53% | 62% | 53% | |
| S&P 500 Win Rate | 75% | 42% | 67% | 75% | 67% | 33% | |
Max Drawdowns [4] | |||||||
| MRK Max Drawdown | -12% | -4% | -8% | -10% | -26% | 0% | |
| Peers Max Drawdown | -6% | -10% | -25% | -8% | -13% | -6% | |
| S&P 500 Max Drawdown | -1% | -25% | -1% | -2% | -15% | -5% | |
[1] Cumulative total returns since the beginning of 2021
[2] Peers: PFE, JNJ, LLY, ABBV, BMY. See MRK Returns vs. Peers.
[3] Win Rate = % of calendar months in which monthly returns were positive
[4] Max drawdown represents maximum peak-to-trough decline within a year
[5] 2026 data is for the year up to 3/27/2026 (YTD)
How Low Can It Go
| Event | MRK | S&P 500 |
|---|---|---|
| 2022 Inflation Shock | ||
| % Loss | -20.2% | -25.4% |
| % Gain to Breakeven | 25.3% | 34.1% |
| Time to Breakeven | 156 days | 464 days |
| 2020 Covid Pandemic | ||
| % Loss | -27.9% | -33.9% |
| % Gain to Breakeven | 38.6% | 51.3% |
| Time to Breakeven | 784 days | 148 days |
| 2018 Correction | ||
| % Loss | -18.2% | -19.8% |
| % Gain to Breakeven | 22.3% | 24.7% |
| Time to Breakeven | 259 days | 120 days |
| 2008 Global Financial Crisis | ||
| % Loss | -65.5% | -56.8% |
| % Gain to Breakeven | 189.5% | 131.3% |
| Time to Breakeven | 2,006 days | 1,480 days |
Compare to PFE, JNJ, LLY, ABBV, BMY
In The Past
Merck's stock fell -20.2% during the 2022 Inflation Shock from a high on 11/4/2021. A -20.2% loss requires a 25.3% gain to breakeven.
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About Merck (MRK)
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Here are 1-3 brief analogies for Merck (MRK):
- Like Pfizer, but with a significant focus on animal health in addition to human pharmaceuticals.
- Similar to the pharmaceutical and vaccine divisions of Johnson & Johnson, plus a major animal health business.
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```html- Human Pharmaceutical Products: Merck develops and markets pharmaceutical drugs targeting various human diseases, including oncology, hospital acute care, immunology, neuroscience, virology, cardiovascular, and diabetes.
- Human Vaccine Products: The company offers a range of vaccine products for the prevention of diseases in pediatric, adolescent, and adult populations.
- Veterinary Pharmaceutical Products: Merck discovers, develops, manufactures, and markets medicinal pharmaceuticals for animal health.
- Animal Vaccines: The company provides vaccines specifically designed to protect animals from various diseases.
- Animal Health Management Solutions and Services: Merck offers health management solutions and services aimed at improving the overall well-being and productivity of animals.
- Digitally Connected Animal Identification & Monitoring Products: The company provides digital products for the identification, traceability, and monitoring of animals.
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Merck (MRK) primarily sells its products to other companies and organizations rather than directly to individuals. Based on the company description, its major customers are intermediaries and healthcare providers. While specific customer names are not provided in the background, the following public companies represent typical major customers within the described categories:
Drug Wholesalers
These companies act as major distributors of pharmaceutical products from manufacturers like Merck to pharmacies, hospitals, and other healthcare providers.
- McKesson Corporation (MCK)
- AmerisourceBergen Corporation (ABC)
- Cardinal Health, Inc. (CAH)
Retail Pharmacies
Large pharmacy chains are significant purchasers and distributors of Merck's pharmaceutical products to the end consumer.
- CVS Health Corporation (CVS)
- Walgreens Boots Alliance, Inc. (WBA)
Managed Health Care Providers and Pharmacy Benefit Managers (PBMs)
These organizations manage healthcare plans and prescription drug benefits for large populations, influencing drug purchasing and formularies.
- UnitedHealth Group Inc. (UNH)
- The Cigna Group (CI)
- Elevance Health, Inc. (ELV)
Hospital Systems
Large hospital networks directly procure a range of pharmaceutical products for patient care.
- HCA Healthcare, Inc. (HCA)
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Robert M. Davis, Chairman and Chief Executive Officer
Robert M. Davis is the Chairman of the Board and Chief Executive Officer of Merck & Co., Inc.. He joined Merck in 2014 as the Chief Financial Officer, with additional responsibilities for real estate operations, corporate strategy, and business development. In 2016, his role expanded to include information technology and procurement, forming Global Services. He became President in April 2021, and then CEO and a member of the board of directors on July 1, 2021. Prior to joining Merck, Mr. Davis was corporate vice president and president of Baxter’s medical products business. During his time at Baxter, he also held positions such as president of Baxter's renal business, chief financial officer, and treasurer. Before his tenure at Baxter, he spent 14 years at Eli Lilly and Company in various roles of increasing responsibility, including Director of Corporate Financial Planning.
Caroline Litchfield, Executive Vice President and Chief Financial Officer
Caroline Litchfield serves as the Executive Vice President and Chief Financial Officer for Merck, overseeing the company's finance, procurement, and real estate operations. She began her career at Merck in 1990 within its U.K. business and has since held numerous positions of increasing responsibility in country, regional, and global finance functions. Ms. Litchfield previously served as the company's treasurer, responsible for treasury, tax, and investor relations. From 2014 to 2018, she led finance for Human Health, Merck's largest business. She was also instrumental in the integration of Merck and Schering-Plough after their 2009 merger, serving as vice president and finance lead for the Emerging Markets region. She was appointed Executive Vice President and CFO, effective April 1, 2021. In June 2024, she was elected to the board of directors for Verizon.
Dean Y. Li, M.D., Ph.D., Executive Vice President and President, Merck Research Laboratories
Dean Y. Li is the Executive Vice President and President of Merck Research Laboratories, where he leads the company's global human vaccines and therapeutics research and development organization. He joined Merck in 2017, taking on leadership roles within the Translational Medicine and Discovery functions. Dr. Li was appointed President of Merck Research Laboratories in January 2021. Before joining Merck, he held positions of increasing responsibility in translational medical research at the University of Utah.
Sanat Chattopadhyay, Executive Vice President and President, Merck Manufacturing Division
Sanat Chattopadhyay is the Executive Vice President and President of the Merck Manufacturing Division. His professional background includes experience with companies such as Pfizer and Sanofi. He has an educational background that includes studies at Jadavpur University and NITIE.
Richard R. DeLuca, Jr., Executive Vice President and President, Merck Animal Health
Richard R. DeLuca, Jr. holds the position of Executive Vice President and President of Merck Animal Health.
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The public company Merck (MRK) faces several key risks to its business, with the most significant revolving around patent expirations of its blockbuster drugs.- Keytruda Patent Cliff: The most significant risk for Merck is the impending patent expiration of its flagship oncology drug, Keytruda (pembrolizumab). Keytruda's primary U.S. patents are set to expire in late 2028, with some extensions potentially pushing exclusivity to 2029. This drug is a major revenue driver for Merck, accounting for nearly half of its pharmaceutical sales in 2024 and 40% in 2023. Analysts project Keytruda sales to peak around $33–34 billion in 2028, followed by a substantial decline of approximately 19% to about $27.4 billion by 2029 as biosimilars enter the U.S. market. Merck is actively pursuing mitigation strategies, including developing a subcutaneous formulation (Keytruda Qlex) that received FDA approval in September 2025, which may help retain patient loyalty and extend some protection, possibly until 2040 or longer for specific formulations. The company is also implementing a $3 billion cost-cutting initiative and investing in new product launches and pipeline development to offset the anticipated revenue decline.
- Loss of Exclusivity for Other Key Products: Beyond Keytruda, Merck faces a broader "loss-of-exclusivity (LOE) wave" for several other significant pharmaceutical products between 2025 and 2029, putting nearly half of its 2024 pharmaceutical revenue at risk. Notably, Januvia/Janumet, Lenvima (in partnership with Eisai), and Gardasil 9 are also facing patent expirations or generic competition around the same period. For instance, U.S. generics for Januvia are expected by mid-2026, and Gardasil 9 U.S. patents expire in 2028. This collective expiration of patents on major revenue-generating drugs presents a significant challenge to Merck's market share and overall revenues.
- Regulatory Changes and Pricing Pressures: Merck, as a global pharmaceutical company, is continuously subject to evolving and increasingly stringent regulatory requirements, particularly concerning drug pricing and reimbursement. With rising global healthcare expenditures, governments worldwide are increasing pressure on pharmaceutical companies, which can negatively impact product profitability and the success of market launches. The Inflation Reduction Act (IRA) in the U.S., for example, includes Medicare price cuts that are active from January 2028, further contributing to pricing pressures.
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- The rapid advancement and expansion of mRNA technology by competitors, potentially displacing Merck's traditional vaccine platforms and certain therapeutic areas.
- The implementation and potential expansion of government-mandated drug price negotiation (e.g., under the U.S. Inflation Reduction Act), which threatens the profitability and R&D investment model for Merck's pharmaceutical products.
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Merck (MRK) operates in diverse healthcare markets, with substantial addressable markets for its main products and services across both its Pharmaceutical and Animal Health segments.
Pharmaceutical Segment
- Oncology: The global oncology market size was estimated at approximately USD 225.01 billion in 2024 and is projected to reach around USD 668.26 billion by 2034. North America held approximately a 46% share of this market in 2024.
- Hospital Acute Care: The global acute hospital care market generated a revenue of USD 3,344,042.1 million (or USD 3.34 trillion) in 2023 and is expected to reach USD 4,903,896.5 million (or USD 4.9 trillion) by 2030. North America was the largest revenue-generating market in 2023, accounting for 55.8% of the global market.
- Immunology: The global immunology market size was valued at USD 108.40 billion in 2024 and is estimated to hit around USD 286.38 billion by 2034. In 2024, North America dominated the global market with the largest share of 53%.
- Neuroscience: The global neuroscience market generated a revenue of USD 44,653.7 million in 2023 and is expected to reach USD 65,224.5 million by 2030. North America was the largest revenue-generating market in 2023.
- Virology: The global virology market size was valued at USD 2.55 billion in 2024 and is projected to reach USD 4.51 billion by 2033. North America was the largest contributor to this market in 2024.
- Cardiovascular: The global cardiovascular drugs market size is calculated at USD 155.96 billion in 2025 and is predicted to increase to approximately USD 214.72 billion by 2034.
- Diabetes: The global diabetes drugs market size was valued at USD 101.48 billion in 2025 and is projected to grow to USD 283.36 billion by 2034. North America dominated the diabetes drugs market with a market share of 49.95% in 2025.
- Vaccines (Human Health): The global human vaccines market was valued at USD 82.80 billion in 2024 and is expected to reach USD 186.73 billion by 2032. North America dominated the vaccine market with the largest revenue share of 38.3% in 2024.
Animal Health Segment
- Veterinary Pharmaceuticals, Vaccines, and Health Management Solutions: The global animal health market size was valued at USD 67.92 Billion in 2024 and is poised to grow to USD 128.05 Billion by 2033. North America held a significant market share of 44.9% in 2025.
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Merck (MRK) anticipates several key drivers to fuel its future revenue growth over the next two to three years:
- Accelerated Launch of New Products and Pipeline Expansion: Merck is intensifying its efforts to launch new drugs and has substantially expanded its late-stage pipeline. The company projects approximately $50 billion in revenue from new growth drivers by the early 2030s, contributing to a target of $70 billion by the mid-2030s. This includes a focus on 10 major programs, all identified as multibillion-dollar opportunities, with several already launched or having positive Phase III clinical trial data.
- Growth in Cardiometabolic and Respiratory Treatments: This therapeutic area is expected to be a significant contributor to future sales, with Merck forecasting nearly $20 billion from these treatments, an increase from previous estimates. New products like Winrevair, particularly for pulmonary arterial hypertension, are anticipated to drive sustained growth.
- Expansion in Infectious Disease Medications: Merck has significantly raised its projections for infectious disease drugs, expecting them to generate approximately $15 billion in sales, a substantial increase from earlier forecasts.
- Sustained Performance and Pipeline Augmentation in Oncology: While Keytruda continues to be a major revenue driver, particularly with increased uptake in earlier-stage cancers and strong international demand, Merck is actively fortifying its oncology pipeline through new product launches and strategic acquisitions to mitigate the impact of future patent expirations. Products like Welireg are also noted as growth drivers.
- Continued Growth in the Animal Health Segment: The Animal Health segment is consistently identified as a source of revenue growth, propelled by strong demand for companion animal products, such as the Bravecto line, favorable pricing strategies, and increased demand for livestock products. Acquisitions, such as the Elanco aqua business, are also expected to contribute to this segment's expansion.
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Capital Allocation Decisions of Merck (MRK) (2021-2025)
Share Repurchases
- Merck's Board of Directors authorized a new $10 billion stock repurchase program in January 2025, with no specified expiration date.
- The company executed annual share buybacks of $1.346 billion in 2023 and $1.306 billion in 2024.
- For the full year 2025, Merck's total share repurchases amounted to approximately $5.13 billion.
Inbound Investments
- In November 2025, Merck secured $700 million in non-refundable funding from Blackstone Life Sciences to support the development of sacituzumab tirumotecan (sac-TMT), an investigational antibody-drug conjugate for various cancer types.
Outbound Investments
- Merck acquired Acceleron Pharma for $11.5 billion in September 2021.
- In April 2023, the company acquired Prometheus Biosciences for $10.8 billion.
- Merck announced an agreement in early July 2025 to acquire Verona Pharma for approximately $10 billion.
Capital Expenditures
- Merck's capital expenditures increased from $3.123 billion in 2023 to $3.475 billion in 2024.
- For the full fiscal year 2025, investment spending included $4.11 billion in capital expenditures.
- The company intends to reinvest savings from a multi-year optimization initiative into higher-growth areas of its pipeline development and to expand its long-term product portfolio.
Latest Trefis Analyses
Trade Ideas
Select ideas related to MRK.
| Date | Ticker | Company | Category | Trade Strategy | 6M Fwd Rtn | 12M Fwd Rtn | 12M Max DD |
|---|---|---|---|---|---|---|---|
| 02282026 | QDEL | QuidelOrtho | Insider | Insider Buys 45DStrong Insider BuyingCompanies with multiple insider buys in the last 45 days | 0.0% | 0.0% | 0.0% |
| 02272026 | CHE | Chemed | Dip Buy | DB | FCFY OPMDip Buy with High FCF Yield and High MarginBuying dips for companies with high FCF yield and meaningfully high operating margin | 0.0% | 0.0% | 0.0% |
| 02272026 | LLY | Eli Lilly | Monopoly | MY | Getting CheaperMonopoly-Like with P/S DeclineLarge cap with monopoly-like margins or cash flow generation and getting cheaper based on P/S multiple | 0.0% | 0.0% | 0.0% |
| 02202026 | HAE | Haemonetics | Dip Buy | DB | FCFY OPMDip Buy with High FCF Yield and High MarginBuying dips for companies with high FCF yield and meaningfully high operating margin | 3.5% | 3.5% | 0.0% |
| 02132026 | IQV | IQVIA | Dip Buy | DB | P/E OPMDip Buy with Low PE and High MarginBuying dips for companies with tame PE and meaningfully high operating margin | 7.1% | 7.1% | -3.0% |
| 08312025 | MRK | Merck | Monopoly | MY | Getting CheaperMonopoly-Like with P/S DeclineLarge cap with monopoly-like margins or cash flow generation and getting cheaper based on P/S multiple | 49.9% | 49.9% | -6.8% |
| 02282025 | MRK | Merck | Insider | Insider Buys 45DStrong Insider BuyingCompanies with multiple insider buys in the last 45 days | -7.1% | 39.3% | -19.7% |
Research & Analysis
Invest in Strategies
Wealth Management
Peer Comparisons
| Peers to compare with: |
Financials
| Median | |
|---|---|
| Name | |
| Mkt Price | 164.51 |
| Mkt Cap | 333.6 |
| Rev LTM | 63,795 |
| Op Inc LTM | 21,100 |
| FCF LTM | 12,602 |
| FCF 3Y Avg | 13,173 |
| CFO LTM | 16,642 |
| CFO 3Y Avg | 15,692 |
Growth & Margins
| Median | |
|---|---|
| Name | |
| Rev Chg LTM | 3.7% |
| Rev Chg 3Y Avg | 2.3% |
| Rev Chg Q | 7.0% |
| QoQ Delta Rev Chg LTM | 1.7% |
| Op Mgn LTM | 30.7% |
| Op Mgn 3Y Avg | 24.6% |
| QoQ Delta Op Mgn LTM | 1.3% |
| CFO/Rev LTM | 25.9% |
| CFO/Rev 3Y Avg | 26.8% |
| FCF/Rev LTM | 19.8% |
| FCF/Rev 3Y Avg | 20.7% |
Valuation
| Median | |
|---|---|
| Name | |
| Mkt Cap | 333.6 |
| P/S | 5.3 |
| P/EBIT | 16.2 |
| P/E | 20.7 |
| P/CFO | 18.7 |
| Total Yield | 7.8% |
| Dividend Yield | 3.0% |
| FCF Yield 3Y Avg | 5.2% |
| D/E | 0.2 |
| Net D/E | 0.1 |
Returns
| Median | |
|---|---|
| Name | |
| 1M Rtn | -4.7% |
| 3M Rtn | 8.4% |
| 6M Rtn | 28.5% |
| 12M Rtn | 11.3% |
| 3Y Rtn | 35.8% |
| 1M Excs Rtn | 5.1% |
| 3M Excs Rtn | 17.2% |
| 6M Excs Rtn | 33.7% |
| 12M Excs Rtn | -0.2% |
| 3Y Excs Rtn | -23.0% |
Comparison Analyses
Price Behavior
| Market Price | $119.63 | |
| Market Cap ($ Bil) | 296.8 | |
| First Trading Date | 01/02/1970 | |
| Distance from 52W High | -2.8% | |
| 50 Days | 200 Days | |
| DMA Price | $115.77 | $94.21 |
| DMA Trend | up | up |
| Distance from DMA | 3.3% | 27.0% |
| 3M | 1YR | |
| Volatility | 23.3% | 29.2% |
| Downside Capture | -0.15 | 0.29 |
| Upside Capture | 44.23 | 67.92 |
| Correlation (SPY) | 11.6% | 32.7% |
| 1M | 2M | 3M | 6M | 1Y | 3Y | |
|---|---|---|---|---|---|---|
| Beta | -0.24 | -0.17 | 0.03 | 0.20 | 0.43 | 0.31 |
| Up Beta | 0.49 | 0.85 | 1.08 | 1.01 | 0.48 | 0.40 |
| Down Beta | 0.37 | -0.23 | -0.61 | -0.35 | 0.44 | 0.35 |
| Up Capture | 37% | 22% | 61% | 79% | 42% | 6% |
| Bmk +ve Days | 9 | 20 | 31 | 70 | 142 | 431 |
| Stock +ve Days | 16 | 24 | 36 | 66 | 134 | 387 |
| Down Capture | -189% | -124% | -58% | -40% | 32% | 39% |
| Bmk -ve Days | 12 | 21 | 30 | 54 | 109 | 320 |
| Stock -ve Days | 5 | 17 | 25 | 58 | 117 | 362 |
[1] Upside and downside betas calculated using positive and negative benchmark daily returns respectively
Based On 1-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with MRK | |
|---|---|---|---|---|
| MRK | 40.9% | 29.1% | 1.18 | - |
| Sector ETF (XLV) | 0.3% | 17.6% | -0.13 | 75.0% |
| Equity (SPY) | 14.5% | 18.9% | 0.59 | 32.7% |
| Gold (GLD) | 50.2% | 27.7% | 1.46 | 1.0% |
| Commodities (DBC) | 17.8% | 17.6% | 0.85 | -1.5% |
| Real Estate (VNQ) | 0.4% | 16.4% | -0.15 | 42.5% |
| Bitcoin (BTCUSD) | -23.7% | 44.2% | -0.49 | 8.8% |
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Based On 5-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with MRK | |
|---|---|---|---|---|
| MRK | 13.6% | 23.3% | 0.52 | - |
| Sector ETF (XLV) | 6.0% | 14.5% | 0.23 | 55.3% |
| Equity (SPY) | 11.8% | 17.0% | 0.54 | 21.1% |
| Gold (GLD) | 20.7% | 17.7% | 0.96 | 0.9% |
| Commodities (DBC) | 11.6% | 18.9% | 0.50 | 1.8% |
| Real Estate (VNQ) | 3.0% | 18.8% | 0.07 | 23.8% |
| Bitcoin (BTCUSD) | 4.0% | 56.6% | 0.29 | 6.3% |
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Based On 10-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with MRK | |
|---|---|---|---|---|
| MRK | 12.6% | 22.6% | 0.52 | - |
| Sector ETF (XLV) | 9.7% | 16.5% | 0.48 | 64.4% |
| Equity (SPY) | 14.0% | 17.9% | 0.67 | 40.5% |
| Gold (GLD) | 13.3% | 15.8% | 0.70 | 1.0% |
| Commodities (DBC) | 8.2% | 17.6% | 0.39 | 11.0% |
| Real Estate (VNQ) | 4.7% | 20.7% | 0.19 | 36.2% |
| Bitcoin (BTCUSD) | 66.4% | 66.8% | 1.06 | 4.9% |
Smart multi-asset allocation framework can stack odds in your favor. Learn How
Returns Analyses
Earnings Returns History
Expand for More| Forward Returns | |||
|---|---|---|---|
| Earnings Date | 1D Returns | 5D Returns | 21D Returns |
| 2/3/2026 | 2.2% | 3.8% | 6.1% |
| 10/30/2025 | -0.3% | -2.5% | 17.6% |
| 7/29/2025 | -1.7% | -5.0% | 1.1% |
| 4/24/2025 | 1.4% | 8.2% | -1.1% |
| 2/4/2025 | -9.1% | -13.4% | -6.6% |
| 10/31/2024 | -2.4% | -3.9% | -3.0% |
| 7/30/2024 | -9.8% | -12.1% | -8.8% |
| 4/25/2024 | 2.9% | 1.4% | 3.2% |
| ... | |||
| SUMMARY STATS | |||
| # Positive | 9 | 10 | 10 |
| # Negative | 15 | 14 | 14 |
| Median Positive | 1.9% | 3.3% | 5.6% |
| Median Negative | -1.9% | -3.8% | -2.6% |
| Max Positive | 6.1% | 8.8% | 17.6% |
| Max Negative | -9.8% | -13.4% | -8.8% |
SEC Filings
Expand for More| Report Date | Filing Date | Filing |
|---|---|---|
| 12/31/2025 | 02/24/2026 | 10-K |
| 09/30/2025 | 11/05/2025 | 10-Q |
| 06/30/2025 | 08/05/2025 | 10-Q |
| 03/31/2025 | 05/02/2025 | 10-Q |
| 12/31/2024 | 02/25/2025 | 10-K |
| 09/30/2024 | 11/06/2024 | 10-Q |
| 06/30/2024 | 08/05/2024 | 10-Q |
| 03/31/2024 | 05/03/2024 | 10-Q |
| 12/31/2023 | 02/26/2024 | 10-K |
| 09/30/2023 | 11/03/2023 | 10-Q |
| 06/30/2023 | 08/07/2023 | 10-Q |
| 03/31/2023 | 05/05/2023 | 10-Q |
| 12/31/2022 | 02/24/2023 | 10-K |
| 09/30/2022 | 11/03/2022 | 10-Q |
| 06/30/2022 | 08/05/2022 | 10-Q |
| 03/31/2022 | 05/05/2022 | 10-Q |
Recent Forward Guidance [BETA]
Latest: Q4 2025 Earnings Reported 2/3/2026 | Prior: Q3 2025 Earnings Reported 10/30/2025
| Forward Guidance | Guidance Change | ||||||
|---|---|---|---|---|---|---|---|
| Metric | Low | Mid | High | % Chg | % Delta | Change | Prior |
| 2026 Revenue | 65.50 Bil | 66.25 Bil | 67.00 Bil | 2.3% | Higher New | Guidance: 64.75 Bil for 2025 | |
| 2026 Non-GAAP Gross Margin | 82.0% | ||||||
| 2026 Non-GAAP Operating Expenses | 35.90 Bil | 36.40 Bil | 36.90 Bil | 39.2% | Higher New | Guidance: 26.15 Bil for 2025 | |
| 2026 Non-GAAP Effective Tax Rate | 23.5% | 24.0% | 24.5% | 65.5% | 9.5% | Higher New | Guidance: 14.5% for 2025 |
| 2026 EPS | 5 | 5.08 | 5.15 | -43.3% | Lower New | Guidance: 8.96 for 2025 | |
Insider Activity
Expand for More| # | Owner | Title | Holding | Action | Filing Date | Price | Shares | Transacted Value | Value of Held Shares | Form |
|---|---|---|---|---|---|---|---|---|---|---|
| 1 | Downing, Cristal N | Chief Comm. & Public Afrs Ofcr | Direct | Sell | 11122025 | 87.00 | 7,085 | Form | ||
| 2 | Williams, David Michael | EVP,Chief Info&Digital Officer | Direct | Sell | 11042025 | 83.59 | 8,614 | 720,040 | 2,054,465 | Form |
| 3 | Smart, Dalton E Iii | SVP Fin. - Global Controller | Direct | Sell | 4292025 | 82.76 | 4,262 | 352,723 | 643,691 | Form |
| 4 | Oosthuizen, Johannes Jacobus | President, U.S. Market | Direct | Sell | 2202025 | 84.09 | 8,500 | 714,745 | 2,581,950 | Form |
| 5 | Williams, David Michael | EVP,Chief Info&Digital Officer | Direct | Sell | 2132025 | 85.34 | 6,000 | 512,057 | 2,058,751 | Form |
MRK Trade Sentinel
OVERWEIGHT (Score 9-10)
CONVICTION RATIONALE
The probability-adjusted skew is highly attractive at 4.58x. The analysis reveals a disconnect: while the market is rightly focused on the long-term patent cliff, it is under-appreciating the durability and competitive strength of the core Keytruda asset in a secularly growing market. The 'WIDENING' moat against its primary competitor provides a strong foundation, making the high-upside pipeline a compelling call option. The investment offers an asymmetrically positive risk/reward.
STOCK ARCHETYPE
Mature Cash CowMerck is a mature pharmaceutical company with significant, high-margin cash flow from its established products, particularly Keytruda. The primary investment debate centers on the durability of this cash flow in the face of a major patent cliff and the company's ability to efficiently allocate capital to its pipeline to replace future lost earnings, which aligns perfectly with the 'Mature Cash Cow' archetype's focus on capital efficiency and pricing power.
INVESTMENT THESIS
The investment thesis is centered on the continued market share dominance of Keytruda in high-margin oncology indications leading up to 2028, coupled with the de-risking and potential commercialization of a multi-asset pipeline projected to generate over $70 billion in non-risk-adjusted revenue by the mid-2030s.
- Keytruda sales reached $31.7B in FY2025, demonstrating continued robust demand.
- Management projects a potential for over $70 billion in annual revenue from new growth drivers by the mid-2030s.
- Keytruda holds a dominant position over Bristol Myers Squibb's Opdivo, with Q4 sales of $8.4B versus Opdivo's ~$2.7B.
- Merck's massive R&D spending ($30.5B in 2023) provides a significant advantage in pipeline development over peers.
PRIMARY RISK
The primary friction is the high-certainty event of Keytruda's U.S. loss of exclusivity in late 2028. This single product accounts for a substantial portion of revenue (~49% of FY2025 sales), and there is significant execution risk on whether the current pipeline can be successfully commercialized to fill this massive, impending revenue gap.
- Keytruda's primary U.S. patent expires in late 2028.
- Merck's 2026 revenue guidance of $65.5B-$67.0B is below analyst consensus, indicating near-term headwinds.
- Gardasil, a key non-oncology growth driver, saw sales decline 39% for the full year 2025, increasing reliance on the oncology pipeline.
| KPI | Threshold | Rationale |
|---|---|---|
| Keytruda Quarterly YoY Growth | Above 5% | Sustained growth above 5% indicates continued market share gains and robust demand, which is critical for funding the R&D pipeline until the patent cliff. |
| Gardasil Quarterly YoY Growth | Return to Positive Growth | A stabilization and return to growth in this key franchise is necessary to demonstrate that the company can manage growth drivers outside of oncology and to alleviate pressure on the pipeline to perform. |
| Pipeline Newsflow (e.g., FDA Decisions, Phase 3 Data) | Positive FDA decision on doravirine/islatravir by April 28, 2026 | This is the most significant near-term binary catalyst. An approval would be the first major step in validating the multi-billion dollar revenue replacement narrative. |
The Post-Keytruda Growth Bridge: Pipeline Execution vs. Patent Cliff
BULL VIEW
Strong initial sales from Winrevair and Capvaxive, plus the Keytruda life-cycle extension, provide a credible, tangible bridge to a future of diversified, durable growth post-2028.
CORE TENSION
Can Merck's new product launches and pipeline (Winrevair, Capvaxive, subcutaneous Keytruda) generate enough revenue to offset the catastrophic 2028 loss of exclusivity for Keytruda, which represents nearly 50% of sales?
PREVAILING SENTIMENT
The current debate is balanced. Bulls point to the successful launches of Winrevair ($976M in 9 months) and Capvaxive ($480M in 9 months). Bears point to the 24% Q3 2025 drop in Gardasil sales and reduced FY26 consensus EPS.
BEAR VIEW
The scale of the Keytruda revenue cliff is too large to overcome. Pipeline execution risk is high, as shown by recent failed M&A, and new products will face their own competitive pressures.
| Timeline | Event & Metric To Watch |
|---|---|
April 7, 2026 | FDA Decision on Subcutaneous Keytruda Watch: FDA approval versus a Complete Response Letter (CRL) for the KEYNOTE-905 submission. A CRL would signal a major delay. |
Late April 2026 | Q1 2026 Earnings & Guidance Update Watch: Sales trajectory of new launches Winrevair and Capvaxive. Any deceleration would spook investors. |
May 21, 2026 (Abstracts) | ASCO Annual Meeting Data Release Watch: Data quality from late-stage cardiovascular or other non-oncology pipeline assets. Failure to meet a primary endpoint would be a negative signal. |
Ongoing, potential updates on any earnings call | Inflation Reduction Act (IRA) Price Negotiation Updates Watch: Management commentary quantifying the expected financial impact on Keytruda and Januvia. A revenue headwind greater than consensus estimates ($500M-$1B) is the key risk. |
| Date | Event | Stock Impact |
|---|---|---|
2025-08-22 | Competitor Drug Delivery Partnership Details: A key Merck partner, Halozyme, faced increased competition as Alteogen's technology was noted for use in a competing subcutaneous Keytruda formulation by Merck itself, highlighting a complex competitive dynamic. [15] | Fell notably by -2.36% $85.78 -> $83.75 |
2025-09-11 | Sale of Priority Review Voucher Details: Merck sold a Priority Review Voucher from its Healthcare business sector to the U.S. FDA for $175 million, generating income. [6] | Modest 1.33% gain $82.50 -> $83.60 |
2025-10-07 | Acquisition of Verona Pharma Details: Merck completed its acquisition of Verona Pharma, bolstering its respiratory pipeline, as noted in the subsequent Q4 earnings call. [8] | Slight -1.34% pullback $88.04 -> $86.86 |
2025-10-30 | Q3 2025 Earnings Release Details: Merck reported strong Q3 results with Keytruda sales up 10% to $8.1B, offsetting a 24% decline in Gardasil sales due to weakness in China. Management raised full-year 2025 guidance. [2, 5] | Muted (-0.69%) $85.84 -> $85.25 |
2026-01-28 | Strategic Acquisitions Announced Details: As part of its strategy to bolster its pipeline, Merck's partner Halozyme announced acquisitions of Elektrofi and Surf Bio to extend its drug delivery technology capabilities into the 2040s. | Slight -0.95% pullback $107.92 -> $106.90 |
2026-02-03 | Q4 2025 Earnings Release Details: Merck reported Q4 2025 sales of $16.4 billion, a 5% year-over-year increase, beating estimates. However, reported EPS of $1.94 missed the Wall Street consensus of around $2.08. [3, 4, 17] | Stock Rose significantly by 5.05% $110.27 -> $115.84 |
Position Sizing
1% - 3%
CONSERVATIVE
Volatility is moderate at 2.55x the S&P 500. However, the Neutral sentiment, contested moat, and medium-term visibility due to the 2028 patent cliff warrant a conservative position size until the pipeline's ability to bridge the gap is proven.
Diversification Alternatives
HALO
SECTORUnlike MRK's concentrated asset risk, HALO has a diversified royalty-based model with over 20 major pharma partners, providing exposure to dozens of drugs and reducing single-product failure risk. Its IP extends into the 2040s.
RPRX
SECTORAs a clinical-stage biotech, RPRX offers higher-risk, higher-reward exposure to oncology innovation without the overhang of a massive patent cliff that burdens MRK. Its focus is purely on pipeline development.
Trading at ~14x TTM P/E, Merck is valued as a mature pharmaceutical company managing the 2028 patent expiration of its leading drug, Keytruda, which accounts for ~49% of total revenue.
Filter all news through the lens of Merck's strategy to offset the upcoming Keytruda loss of exclusivity (LOE) in 2028.
Strong uptake and blockbuster sales trajectory for new launches (Winrevair, Capvaxive); positive Phase 3 data from key pipeline assets (e.g., oral PCSK9 inhibitor enlicitide, immunology drug tulisokibart); value-accretive M&A in oncology or other high-growth therapeutic areas.
Slower than expected sales ramp for new products; clinical trial failures or delays in the late-stage pipeline; significant new competition for Keytruda pre-2028; further deterioration in Gardasil sales in key markets like China.
Quarterly fluctuations in sales of legacy products (e.g., Januvia); minor pipeline updates for early-stage (Phase 1/2) assets; general commentary on U.S. drug pricing reform that is not specific to a Merck product.
Repricing Catalyst
Merck's ability to demonstrate a credible path to growth beyond 2028 through its new product portfolio and late-stage pipeline. The rapid ramp of Winrevair ($1.4B in its first full year) and Capvaxive ($759M in its first year) are the primary drivers, supported by a pipeline of potential multi-billion dollar assets including oral PCSK9 inhibitor enlicitide and various oncology antibody-drug conjugates (ADCs).
Oncology (Keytruda Franchise)
$31.7B TTM (49% of Total) · 82% MarginWhat It Is
Keytruda (pembrolizumab), a PD-1 inhibitor for various cancers; Keytruda Qlex (subcutaneous formulation); Welireg (belzutifan) for renal cell carcinoma.
Who Pays & How
Major US pharmaceutical wholesalers (such as McKesson, AmerisourceBergen, and Cardinal Health) and international health systems pay for Keytruda because it is a foundational, standard-of-care immunotherapy for over 40 types of cancer. Its extensive clinical data and broad approvals create a significant moat.
Competition
Vaccines
$8.0B TTM (12% of Total) · 82% MarginWhat It Is
Gardasil/Gardasil 9 (HPV vaccine); Capvaxive (pneumococcal 21-valent conjugate vaccine); ProQuad (MMR & Varicella); RotaTeq (rotavirus).
Who Pays & How
Governments, through national immunization programs, and private payors pay for vaccines to prevent infectious diseases. Gardasil is the dominant HPV vaccine globally for preventing cervical and other cancers.
Competition
Animal Health
$6.4B TTM (10% of Total) · 82% MarginWhat It Is
Pharmaceuticals and vaccines for livestock and companion animals, including the Bravecto line of parasiticides ($1.1B in 2025 sales).
Who Pays & How
Veterinarians, farmers, and pet owners pay for products to prevent and treat diseases in animals, ensuring animal health and food safety.
Competition
Other Pharmaceuticals (incl. New Launches)
$17.9B TTM (29% of Total) · 82% MarginWhat It Is
Winrevair ($1.4B, for PAH), Lagevrio (COVID-19 antiviral), Januvia (diabetes), Isentress (HIV), and a portfolio of other hospital and specialty care products.
Who Pays & How
Distributors, hospitals, and pharmacies purchase these drugs to treat a wide range of conditions from cardiovascular disease (Winrevair) to infectious diseases.
Competition
External Quote Links
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