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Merck Moves Past 50-Day Average: How to Play MRK Stock Now
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Key Takeaways
MRK stock has crossed its 50-day SMA after months of underperformance since mid-March.
Keytruda drives about half of Merck's pharma sales, with growth in early-stage lung cancer use.
Gardasil sales slump in China, prompting Merck to halt shipments amid elevated inventory levels.
Merck (MRK - Free Report) has reached a significant support level, making it an attractive option for investors from a technical standpoint. Since early June, the stock has broken through its 50-day simple moving average (SMA), indicating a potential short-term bullish trend.
The 50-day SMA is a key indicator for traders and analysts, used to identify support and resistance levels. It is considered particularly important as it's the first marker of an uptrend or a downtrend.
The stock has traded below its 50-day average since mid-March as the company faces several headwinds, including lowered 2025 guidance, concerns about the long-term performance of Keytruda and Gardasil, and weak sales of Gardasil in China.
Let’s understand the company’s strengths and weaknesses to better analyze how to play the stock as it crosses the 50-day SMA mark.
Keytruda: Merck’s Biggest Strength
Merck boasts more than six blockbuster drugs in its portfolio, with the blockbuster PD-L1 inhibitor Keytruda being the key top-line driver. Keytruda, approved for several types of cancer, alone accounts for around 50% of the company’s pharmaceutical sales. The drug has played an instrumental role in driving Merck’s steady revenue growth in the past few years.
Keytruda’s sales are gaining from rapid uptake across earlier-stage indications, mainly early-stage non-small cell lung cancer. Continued strong momentum in metastatic indications is also boosting sales growth. The company expects continued growth from Keytruda, particularly in early lung cancer.
The company is working on different strategies to drive Keytruda's long-term growth. These include innovative immuno-oncology combinations, including Keytruda with LAG3 and CTLA-4 inhibitors. In partnership with Moderna (MRNA - Free Report) , Merck is developing a personalized mRNA therapeutic cancer vaccine (V940/mRNA-4157) in combination with Keytruda for patients with certain types of melanoma and non-small cell lung cancer (NSCLC). Merck and Moderna are conducting pivotal phase III studies on V940, in combination with Keytruda, for earlier-stage and adjuvant NSCLC and adjuvant melanoma.
Merck is also developing a subcutaneous formulation of Keytruda that can extend its patent life. It is under review in the United States and an FDA decision is expected in September.
MRK’s Pipeline Progress & Strategic M&A Deals
Merck has been making meaningful regulatory and clinical progress across areas like oncology (mainly Keytruda), vaccines and infectious diseases while executing strategic business moves.
Merck’s phase III pipeline has almost tripled since 2021, supported by in-house pipeline progress as well as the addition of candidates through M&A deals. This has positioned Merck to launch around 20 new vaccines and drugs over the next few years, with many having blockbuster potential. Merck’s new 21-valent pneumococcal conjugate vaccine, Capvaxive, and pulmonary arterial hypertension drug, Winrevair, have the potential to generate significant revenues over the long term. Both products have witnessed a strong launch.
The company’s long-acting monoclonal antibody, Enflonsia (clesrovimab), for the prevention of respiratory syncytial virus was approved by the FDA earlier this month.
Merck has other promising candidates in its late-stage pipeline, such as enlicitide decanoate/MK-0616, an oral PCSK9 inhibitor for hypercholesterolemia, tulisokibart, a TL1A inhibitor for ulcerative colitis and Daiichi-Sankyo-partnered antibody-drug conjugates. To foray into the lucrative obesity market, Merck has in-licensed global rights to an investigational oral GLP-1 receptor agonist, HS-10535, from Chinese biotech Hansoh Pharma.
MRK’s Keytruda Faces Patent Expiration in 2028
Merck is heavily reliant on Keytruda. Though Keytruda may be Merck’s biggest strength and a solid reason to own the stock, it can also be argued that the company is excessively dependent on the drug, and it should look for ways to diversify its product lineup.
There are rising concerns about the firm’s ability to grow its non-oncology business ahead of the upcoming loss of exclusivity of Keytruda in 2028.
Also, competitive pressure might increase for Keytruda in the near future. In 2024, Summit Therapeutics (SMMT - Free Report) reported positive data from a phase III study (conducted in China by partner Akeso) in patients with locally advanced or metastatic NSCLC, in which its lead pipeline candidate, ivonescimab, a dual PD-1 and VEGF inhibitor, outperformed Keytruda. Summit believes iivonescimab has the potential to replace Keytruda as the next standard of care across multiple NSCLC settings.
Declining Sales of MRK’s Gardasil in China
Sales of Gardasil, which is Merck’s second-largest product, are declining due to weak performance in China, which resulted from sluggish demand trends amid an economic slowdown. Lower demand in China resulted in above-normal channel inventory levels at Merck’s commercialization partner in China, Zhifei. Accordingly, Merck decided to temporarily halt shipments of Gardasil in China. At the midpoint of the total revenue guidance for 2025, Merck assumes no further Gardasil shipments to China this year.
However, Gardasil sales remain strong in almost every major region outside China, including the United States.
Merck is also seeing declining demand for its diabetes products and the generic erosion of some drugs.
MRK Share Price Valuation & Estimates
Merck’s shares have lost 17.7% so far this year compared with a decrease of 1.3% for the industry. The stock has also underperformed the sector and the S&P 500, as seen in the chart below.
From a valuation standpoint, Merck appears attractive relative to the industry. Going by the price/earnings ratio, the company’s shares currently trade at 8.63 forward earnings, lower than 14.79 for the industry as well as its 5-year mean of 12.86.
MRK Stock Valuation
Image Source: Zacks Investment Research
Merck’s EPS estimates for both 2025 and 2026 have declined over the past 60 days.
MRK Estimate Movement
Image Source: Zacks Investment Research
Short-Term Investors May Consider Selling MRK Stock
Merck has one of the world’s best-selling drugs in its portfolio, generating billions of dollars in revenues. Though Keytruda will lose patent exclusivity in 2028, its sales are expected to remain strong until then. Merck’s new products, Capvaxive and Winrevair, are witnessing strong launches and have the potential to generate significant revenues over the long term.
However, the company’s problems are too many at present, including persistent challenges for Gardasil in China, potential competition for Keytruda and rising competitive and generic pressure on some drugs. All these factors have raised doubts about Merck’s ability to navigate the Keytruda loss of exclusivity period successfully. Consistently declining estimates and price depreciation reflect analysts’ pessimistic outlook for the stock.
We believe short-term investors may consider selling this Zacks Rank #4 (Sell) stock due to its several near-term headwinds and invest in better blue-chip drugmakers like Novartis, AbbVie and Bayer. If MRK’s stock continues to trade above the 50-day average for a long time, it may bring investor attention back to the stock.
Image: Bigstock
Merck Moves Past 50-Day Average: How to Play MRK Stock Now
Key Takeaways
Merck (MRK - Free Report) has reached a significant support level, making it an attractive option for investors from a technical standpoint. Since early June, the stock has broken through its 50-day simple moving average (SMA), indicating a potential short-term bullish trend.
The 50-day SMA is a key indicator for traders and analysts, used to identify support and resistance levels. It is considered particularly important as it's the first marker of an uptrend or a downtrend.
The stock has traded below its 50-day average since mid-March as the company faces several headwinds, including lowered 2025 guidance, concerns about the long-term performance of Keytruda and Gardasil, and weak sales of Gardasil in China.
Let’s understand the company’s strengths and weaknesses to better analyze how to play the stock as it crosses the 50-day SMA mark.
Keytruda: Merck’s Biggest Strength
Merck boasts more than six blockbuster drugs in its portfolio, with the blockbuster PD-L1 inhibitor Keytruda being the key top-line driver. Keytruda, approved for several types of cancer, alone accounts for around 50% of the company’s pharmaceutical sales. The drug has played an instrumental role in driving Merck’s steady revenue growth in the past few years.
Keytruda’s sales are gaining from rapid uptake across earlier-stage indications, mainly early-stage non-small cell lung cancer. Continued strong momentum in metastatic indications is also boosting sales growth. The company expects continued growth from Keytruda, particularly in early lung cancer.
The company is working on different strategies to drive Keytruda's long-term growth. These include innovative immuno-oncology combinations, including Keytruda with LAG3 and CTLA-4 inhibitors. In partnership with Moderna (MRNA - Free Report) , Merck is developing a personalized mRNA therapeutic cancer vaccine (V940/mRNA-4157) in combination with Keytruda for patients with certain types of melanoma and non-small cell lung cancer (NSCLC). Merck and Moderna are conducting pivotal phase III studies on V940, in combination with Keytruda, for earlier-stage and adjuvant NSCLC and adjuvant melanoma.
Merck is also developing a subcutaneous formulation of Keytruda that can extend its patent life. It is under review in the United States and an FDA decision is expected in September.
MRK’s Pipeline Progress & Strategic M&A Deals
Merck has been making meaningful regulatory and clinical progress across areas like oncology (mainly Keytruda), vaccines and infectious diseases while executing strategic business moves.
Merck’s phase III pipeline has almost tripled since 2021, supported by in-house pipeline progress as well as the addition of candidates through M&A deals. This has positioned Merck to launch around 20 new vaccines and drugs over the next few years, with many having blockbuster potential. Merck’s new 21-valent pneumococcal conjugate vaccine, Capvaxive, and pulmonary arterial hypertension drug, Winrevair, have the potential to generate significant revenues over the long term. Both products have witnessed a strong launch.
The company’s long-acting monoclonal antibody, Enflonsia (clesrovimab), for the prevention of respiratory syncytial virus was approved by the FDA earlier this month.
Merck has other promising candidates in its late-stage pipeline, such as enlicitide decanoate/MK-0616, an oral PCSK9 inhibitor for hypercholesterolemia, tulisokibart, a TL1A inhibitor for ulcerative colitis and Daiichi-Sankyo-partnered antibody-drug conjugates. To foray into the lucrative obesity market, Merck has in-licensed global rights to an investigational oral GLP-1 receptor agonist, HS-10535, from Chinese biotech Hansoh Pharma.
MRK’s Keytruda Faces Patent Expiration in 2028
Merck is heavily reliant on Keytruda. Though Keytruda may be Merck’s biggest strength and a solid reason to own the stock, it can also be argued that the company is excessively dependent on the drug, and it should look for ways to diversify its product lineup.
There are rising concerns about the firm’s ability to grow its non-oncology business ahead of the upcoming loss of exclusivity of Keytruda in 2028.
Also, competitive pressure might increase for Keytruda in the near future. In 2024, Summit Therapeutics (SMMT - Free Report) reported positive data from a phase III study (conducted in China by partner Akeso) in patients with locally advanced or metastatic NSCLC, in which its lead pipeline candidate, ivonescimab, a dual PD-1 and VEGF inhibitor, outperformed Keytruda. Summit believes iivonescimab has the potential to replace Keytruda as the next standard of care across multiple NSCLC settings.
Declining Sales of MRK’s Gardasil in China
Sales of Gardasil, which is Merck’s second-largest product, are declining due to weak performance in China, which resulted from sluggish demand trends amid an economic slowdown. Lower demand in China resulted in above-normal channel inventory levels at Merck’s commercialization partner in China, Zhifei. Accordingly, Merck decided to temporarily halt shipments of Gardasil in China. At the midpoint of the total revenue guidance for 2025, Merck assumes no further Gardasil shipments to China this year.
However, Gardasil sales remain strong in almost every major region outside China, including the United States.
Merck is also seeing declining demand for its diabetes products and the generic erosion of some drugs.
MRK Share Price Valuation & Estimates
Merck’s shares have lost 17.7% so far this year compared with a decrease of 1.3% for the industry. The stock has also underperformed the sector and the S&P 500, as seen in the chart below.
Merck Stock Underperforms Industry, Sector & S&P 500
From a valuation standpoint, Merck appears attractive relative to the industry. Going by the price/earnings ratio, the company’s shares currently trade at 8.63 forward earnings, lower than 14.79 for the industry as well as its 5-year mean of 12.86.
MRK Stock Valuation
Merck’s EPS estimates for both 2025 and 2026 have declined over the past 60 days.
MRK Estimate Movement
Short-Term Investors May Consider Selling MRK Stock
Merck has one of the world’s best-selling drugs in its portfolio, generating billions of dollars in revenues. Though Keytruda will lose patent exclusivity in 2028, its sales are expected to remain strong until then. Merck’s new products, Capvaxive and Winrevair, are witnessing strong launches and have the potential to generate significant revenues over the long term.
However, the company’s problems are too many at present, including persistent challenges for Gardasil in China, potential competition for Keytruda and rising competitive and generic pressure on some drugs. All these factors have raised doubts about Merck’s ability to navigate the Keytruda loss of exclusivity period successfully. Consistently declining estimates and price depreciation reflect analysts’ pessimistic outlook for the stock.
We believe short-term investors may consider selling this Zacks Rank #4 (Sell) stock due to its several near-term headwinds and invest in better blue-chip drugmakers like Novartis, AbbVie and Bayer. If MRK’s stock continues to trade above the 50-day average for a long time, it may bring investor attention back to the stock.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.