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Merck Stock Down 7% in a Month: Should Investors Hold or Exit?
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Key Takeaways
Merck fell after a phase III Keytruda-Lenvima kidney cancer study missed its main goals.
MRK's first-quarter revenues rose 5% to $16.3 billion, driven by Keytruda and Winrevair growth.
Merck expects 20 launches by 2030 as Winrevair, Capvaxive and recent deals expand its pipeline.
Merck’s (MRK - Free Report) stock has declined 7.3% in the past month despite announcing a solid first-quarter 2026 report on April 30. Merck beat estimates for both earnings and sales. Total revenues rose 5% to $16.3 billion, helped by strong growth from Keytruda and Winrevair. However, the company incurred a loss of $1.28 per share in the quarter due to a one-time charge of $3.62 per share related to the acquisition of Cidara, which closed in the first quarter. Even though the acquisition will benefit the company in the long run, a reported loss can limit investor optimism. The company also slightly raised its sales range, which may have been below investor expectations.
Also, in late April, the company faced a pipeline setback, which resulted in the stock’s recent sell-off. Merck and Eisai’s phase III LITESPARK-012 study evaluating two triplet combinations of blockbuster PD-L1 inhibitor, Keytruda plus Lenvima, failed to meet its main goals in previously untreated patients with advanced clear cell renal cell carcinoma, a common form of kidney cancer.
However, a single quarter’s results are not so important for long-term investors to make an investment decision. Let’s understand the company’s strengths and weaknesses to better analyze how to play Merck stock in the post-earnings scenario.
Keytruda: Merck’s Biggest Strength
Merck boasts more than six blockbuster drugs in its portfolio, with Keytruda being the key top-line driver. Keytruda, approved for several types of cancer, alone accounts for around 55% of the company’s pharmaceutical sales. Keytruda now holds 44 FDA-approved indications spanning 19 tumor types, along with two tumor-agnostic approvals.
The drug has played an instrumental role in driving Merck’s steady revenue growth over the past few years. Keytruda recorded sales of $8.0 billion in the first quarter of 2026, up 8% year over year.
Keytruda sales are gaining from continued strong momentum in metastatic indications and rapid uptake across earlier-stage launches. The company expects the growth to continue till it loses patent exclusivity in 2028.
Merck 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 called intismeran autogene (V940/mRNA-4157) in combination with Keytruda in pivotal phase III studies for earlier-stage and adjuvant NSCLC and adjuvant melanoma.
Merck expects Keytruda to achieve peak sales of $35 billion by 2028. Merck’s other oncology drugs, Welireg, AstraZeneca (AZN)-partnered Lynparza and Eisai-partnered Lenvima, are also contributing to top-line growth.
Merck’s Animal Health business is also a key contributor to its top-line growth, with sales expected to more than double by mid-2030s.
MRK’s Pipeline Progress & Recent M&A Spree
Merck’s expanding drug pipeline and potential new blockbuster drugs beyond Keytruda look encouraging.
Its 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. Merck expects to launch 20 new drugs by 2030, with many already launched.
Some key new products with blockbuster potential are its 21-valent pneumococcal conjugate vaccine, Capvaxive, and pulmonary arterial hypertension drug, Winrevair. Both products have witnessed a strong launch and have the potential to generate significant revenues over the long term.
Merck’s RSV antibody, Enflonsia (clesrovimab), was approved in the United States in June 2025 and in the EU in April 2026. A once-daily, single-tablet two-drug regimen of doravirine and islatravir, Idvynso, was approved in the United States for virologically suppressed HIV-1 in April 2026.
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.
Merck has been on an acquisition spree in the past year, as it faces the looming patent expiration of Keytruda in 2028. The acquisition of Verona in 2025 added Ohtuvayre, a novel, first-in-class maintenance treatment for chronic obstructive pulmonary disease, with multibillion-dollar commercial potential. Ohtuvayre's commercial launch is off to a solid start.
In January 2026, Merck acquired Cidara Therapeutics, which added its lead pipeline candidate, MK-1406 (formerly CD388), a first-in-class long-acting, strain-agnostic antiviral agent, currently being evaluated in late-stage studies for the prevention of seasonal influenza in individuals at higher risk of complications.
In April 2026, it acquired California-based cancer biotech, Terns Pharmaceuticals, which added Terns’ lead chronic myeloid leukemia candidate, TERN-701, a novel oral allosteric inhibitor of the BCR::ABL oncogene, to Merck’s hematology/cancer pipeline. Merk believes TERN-701 has multibillion-dollar commercial potential.
Declining Sales of MRK’s Gardasil & Other Vaccines
Sales of Merck’s second-largest product, its HPV vaccine, Gardasil, plunged 22% to $1.07 billion in the first quarter due to continued weak sales performance in China. Sales of Gardasil are declining in China due to weak demand trends amid an economic slowdown. The company is also seeing lower demand for the vaccine in Japan. Gardasil sales are not expected to improve in 2026.
Sales of some other Merck vaccines, like Proquad, M-M-R II, Varivax, Rotateq and Vaxneuvance, also declined in the first quarter.
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, the company is excessively dependent on the drug. Keytruda’s core U.S. patent is expected to expire around 2028, with additional patents expiring slightly after that. Keytruda is expected to face significant biosimilar competition around 2028-2029. Once biosimilars enter, Keytruda’s sales are likely to decline sharply.
Also, competitive pressure might increase for Keytruda in the near future from dual PD-1/VEGF inhibitors that inhibit both the PD-1 pathway and the VEGF pathway at once. They are designed to overcome the limitations of single-target therapies like Keytruda.
MRK’s Generic Headwinds in 2026
MRK is seeing declining demand for its diabetes products (Januvia/Janumet) and the generic erosion of some drugs like Isentress/Isentress HD and Bridion in the European Union and Dificid in the United States. Bridion is expected to lose patent exclusivity in the United States in July 2026, and sales are expected to significantly decline thereafter. Sales of Januvia/Janumet are expected to decline steeply from 2026 onward due to government price setting, an anticipated patent expiry in 2026 and ongoing competitive pressure.
In 2026, Merck expects generic competition for Januvia/Janumet, Bridion and Dificid to hurt revenues by approximately $2.5 billion.
MRK Share Price, Valuation & Estimates
Merck’s shares have risen 38.4% in the past year compared with an increase of 17.3% for the industry. The stock has also outperformed the sector as well as the S&P 500 index.
From a valuation standpoint, Merck looks slightly expensive. Going by the price/earnings ratio, the company’s shares currently trade at 16.79 forward earnings, slightly higher than 16.40 for the industry. The stock is also trading above its 5-year mean of 12.70. However, the stock is cheaper than other drugmakers like Eli Lilly (LLY - Free Report) and J&J (JNJ - Free Report) .
MRK Stock Valuation
Image Source: Zacks Investment Research
Estimates for MRK’s 2026 earnings have risen from $4.87 to $4.88 per share over the past 30 days, while those for 2027 have declined from $9.85 per share to $9.77 per share.
MRK Estimate Movement
Image Source: Zacks Investment Research
Stay Invested in 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, Winrevair, Welireg and Capvaxive, key pipeline progress and expansion of its respiratory and infectious disease and oncology portfolios through the acquisitions of Verona Pharma, Cidara Therapeutics and Terns Pharmaceuticals have improved its long-term growth prospects.
Merck expects over $70 billion of potential non-risk-adjusted commercial opportunity for the current pipeline by the mid-2030s. This estimate is more than double the peak consensus sales estimate for Keytruda of $35 billion in 2028. Merck said that the estimate of $70 billion was $20 billion higher than what they expected just one year ago.
The new products and strong progress in its pipeline have increased confidence that Merck may be able to maintain growth even after Keytruda loses exclusivity.
However, Merck faces several near-term challenges, including persistent challenges for Gardasil in China, potential competition for Keytruda, and rising competitive and generic pressure on some of its drugs. Also, estimates have declined recently due to costs related to its various M&A deals.
Long-term investors may continue retaining this Zacks Rank #3 (Hold) stock and see how the company manages its future product and pipeline growth and replaces Keytruda revenues. However, short-term investors may reduce their position in the stock as there seems to be limited prospects for growth in the near term. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Merck Stock Down 7% in a Month: Should Investors Hold or Exit?
Key Takeaways
Merck’s (MRK - Free Report) stock has declined 7.3% in the past month despite announcing a solid first-quarter 2026 report on April 30. Merck beat estimates for both earnings and sales. Total revenues rose 5% to $16.3 billion, helped by strong growth from Keytruda and Winrevair. However, the company incurred a loss of $1.28 per share in the quarter due to a one-time charge of $3.62 per share related to the acquisition of Cidara, which closed in the first quarter. Even though the acquisition will benefit the company in the long run, a reported loss can limit investor optimism. The company also slightly raised its sales range, which may have been below investor expectations.
Also, in late April, the company faced a pipeline setback, which resulted in the stock’s recent sell-off. Merck and Eisai’s phase III LITESPARK-012 study evaluating two triplet combinations of blockbuster PD-L1 inhibitor, Keytruda plus Lenvima, failed to meet its main goals in previously untreated patients with advanced clear cell renal cell carcinoma, a common form of kidney cancer.
However, a single quarter’s results are not so important for long-term investors to make an investment decision. Let’s understand the company’s strengths and weaknesses to better analyze how to play Merck stock in the post-earnings scenario.
Keytruda: Merck’s Biggest Strength
Merck boasts more than six blockbuster drugs in its portfolio, with Keytruda being the key top-line driver. Keytruda, approved for several types of cancer, alone accounts for around 55% of the company’s pharmaceutical sales. Keytruda now holds 44 FDA-approved indications spanning 19 tumor types, along with two tumor-agnostic approvals.
The drug has played an instrumental role in driving Merck’s steady revenue growth over the past few years. Keytruda recorded sales of $8.0 billion in the first quarter of 2026, up 8% year over year.
Keytruda sales are gaining from continued strong momentum in metastatic indications and rapid uptake across earlier-stage launches. The company expects the growth to continue till it loses patent exclusivity in 2028.
Merck 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 called intismeran autogene (V940/mRNA-4157) in combination with Keytruda in pivotal phase III studies for earlier-stage and adjuvant NSCLC and adjuvant melanoma.
Merck expects Keytruda to achieve peak sales of $35 billion by 2028. Merck’s other oncology drugs, Welireg, AstraZeneca (AZN)-partnered Lynparza and Eisai-partnered Lenvima, are also contributing to top-line growth.
Merck’s Animal Health business is also a key contributor to its top-line growth, with sales expected to more than double by mid-2030s.
MRK’s Pipeline Progress & Recent M&A Spree
Merck’s expanding drug pipeline and potential new blockbuster drugs beyond Keytruda look encouraging.
Its 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. Merck expects to launch 20 new drugs by 2030, with many already launched.
Some key new products with blockbuster potential are its 21-valent pneumococcal conjugate vaccine, Capvaxive, and pulmonary arterial hypertension drug, Winrevair. Both products have witnessed a strong launch and have the potential to generate significant revenues over the long term.
Merck’s RSV antibody, Enflonsia (clesrovimab), was approved in the United States in June 2025 and in the EU in April 2026. A once-daily, single-tablet two-drug regimen of doravirine and islatravir, Idvynso, was approved in the United States for virologically suppressed HIV-1 in April 2026.
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.
Merck has been on an acquisition spree in the past year, as it faces the looming patent expiration of Keytruda in 2028. The acquisition of Verona in 2025 added Ohtuvayre, a novel, first-in-class maintenance treatment for chronic obstructive pulmonary disease, with multibillion-dollar commercial potential. Ohtuvayre's commercial launch is off to a solid start.
In January 2026, Merck acquired Cidara Therapeutics, which added its lead pipeline candidate, MK-1406 (formerly CD388), a first-in-class long-acting, strain-agnostic antiviral agent, currently being evaluated in late-stage studies for the prevention of seasonal influenza in individuals at higher risk of complications.
In April 2026, it acquired California-based cancer biotech, Terns Pharmaceuticals, which added Terns’ lead chronic myeloid leukemia candidate, TERN-701, a novel oral allosteric inhibitor of the BCR::ABL oncogene, to Merck’s hematology/cancer pipeline. Merk believes TERN-701 has multibillion-dollar commercial potential.
Declining Sales of MRK’s Gardasil & Other Vaccines
Sales of Merck’s second-largest product, its HPV vaccine, Gardasil, plunged 22% to $1.07 billion in the first quarter due to continued weak sales performance in China. Sales of Gardasil are declining in China due to weak demand trends amid an economic slowdown. The company is also seeing lower demand for the vaccine in Japan. Gardasil sales are not expected to improve in 2026.
Sales of some other Merck vaccines, like Proquad, M-M-R II, Varivax, Rotateq and Vaxneuvance, also declined in the first quarter.
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, the company is excessively dependent on the drug. Keytruda’s core U.S. patent is expected to expire around 2028, with additional patents expiring slightly after that. Keytruda is expected to face significant biosimilar competition around 2028-2029. Once biosimilars enter, Keytruda’s sales are likely to decline sharply.
Also, competitive pressure might increase for Keytruda in the near future from dual PD-1/VEGF inhibitors that inhibit both the PD-1 pathway and the VEGF pathway at once. They are designed to overcome the limitations of single-target therapies like Keytruda.
MRK’s Generic Headwinds in 2026
MRK is seeing declining demand for its diabetes products (Januvia/Janumet) and the generic erosion of some drugs like Isentress/Isentress HD and Bridion in the European Union and Dificid in the United States. Bridion is expected to lose patent exclusivity in the United States in July 2026, and sales are expected to significantly decline thereafter. Sales of Januvia/Janumet are expected to decline steeply from 2026 onward due to government price setting, an anticipated patent expiry in 2026 and ongoing competitive pressure.
In 2026, Merck expects generic competition for Januvia/Janumet, Bridion and Dificid to hurt revenues by approximately $2.5 billion.
MRK Share Price, Valuation & Estimates
Merck’s shares have risen 38.4% in the past year compared with an increase of 17.3% for the industry. The stock has also outperformed the sector as well as the S&P 500 index.
Merck Stock Outperforms Industry, Sector & S&P 500
From a valuation standpoint, Merck looks slightly expensive. Going by the price/earnings ratio, the company’s shares currently trade at 16.79 forward earnings, slightly higher than 16.40 for the industry. The stock is also trading above its 5-year mean of 12.70. However, the stock is cheaper than other drugmakers like Eli Lilly (LLY - Free Report) and J&J (JNJ - Free Report) .
MRK Stock Valuation
Estimates for MRK’s 2026 earnings have risen from $4.87 to $4.88 per share over the past 30 days, while those for 2027 have declined from $9.85 per share to $9.77 per share.
MRK Estimate Movement
Stay Invested in 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, Winrevair, Welireg and Capvaxive, key pipeline progress and expansion of its respiratory and infectious disease and oncology portfolios through the acquisitions of Verona Pharma, Cidara Therapeutics and Terns Pharmaceuticals have improved its long-term growth prospects.
Merck expects over $70 billion of potential non-risk-adjusted commercial opportunity for the current pipeline by the mid-2030s. This estimate is more than double the peak consensus sales estimate for Keytruda of $35 billion in 2028. Merck said that the estimate of $70 billion was $20 billion higher than what they expected just one year ago.
The new products and strong progress in its pipeline have increased confidence that Merck may be able to maintain growth even after Keytruda loses exclusivity.
However, Merck faces several near-term challenges, including persistent challenges for Gardasil in China, potential competition for Keytruda, and rising competitive and generic pressure on some of its drugs. Also, estimates have declined recently due to costs related to its various M&A deals.
Long-term investors may continue retaining this Zacks Rank #3 (Hold) stock and see how the company manages its future product and pipeline growth and replaces Keytruda revenues. However, short-term investors may reduce their position in the stock as there seems to be limited prospects for growth in the near term. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.