We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Merck’s (MRK - Free Report) stock has declined 7.2% in a month. Investors are looking at this correction as a pullback after a strong run rather than a deterioration in its core business. The stock has surged roughly 60% over the past year. It also reached a 52-week high of about $157 in late August.
In general, investors have become more confident in Merck’s growth outlook and ability to offset the eventual patent cliff of its blockbuster cancer drug, Keytruda, after 2028. Keytruda continues to deliver solid growth, while newer products such as Winrevair, Welireg and Ohtuvayre are scaling rapidly. Merck has also been aggressively building its pipeline through acquisitions and partnerships, and investors are increasingly giving credit to these efforts. Merck's partnership with Moderna (MRNA - Free Report) around the personalized cancer vaccine intismeran autogene has also become more important.
Let’s understand all these factors in detail and analyze Merck’s strengths and weaknesses to understand how to play the stock in such a scenario.
Merck’s Keytruda Engine Continues to Power Top-Line Growth
Merck has more than six blockbuster drugs in its portfolio, with Keytruda as the primary top-line driver. Keytruda, approved for several types of cancer, alone accounts for more than 55% of the company’s pharmaceutical sales. In the United States, Keytruda is approved for more than 45 indications spanning 19 tumor types, along with two tumor-agnostic approvals, as well as for many of these indications worldwide.
The drug has played an instrumental role in driving Merck’s steady revenue growth over the past few years. 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. More than 2,800 clinical studies are currently evaluating Keytruda across multiple cancer types and treatment settings.
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, Merck is developing a personalized mRNA therapeutic cancer vaccine called intismeran autogene in combination with Keytruda in pivotal phase III studies for earlier-stage and adjuvant NSCLC and adjuvant melanoma. The combo therapy recently met both primary and secondary endpoints in a phase III study in certain patients with high-risk melanoma.
Merck’s subcutaneous formulation of Keytruda, known as Keytruda Qlex, was approved in the United States and EU in 2025 and generated sales of $590 million in the first half of 2026. Keytruda Qlex can offer substantially quicker administration time than the intravenous infusion of Keytruda.
Merck expects Keytruda to achieve peak sales of $35 billion by 2028. Merck’s other oncology drugs, Welireg, AstraZeneca (AZN - Free Report) -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 the mid-2030s.
Merck’s Pipeline Strengthens Its Outlook Beyond Keytruda
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 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.
Its new products, pulmonary arterial hypertension drug Winrevair, cancer drug Welireg and 21-valent pneumococcal conjugate vaccine Capvaxive, have begun to contribute significantly to top-line growth.
Some new products approved/launched recently are RSV antibody, Enflonsia (clesrovimab), Idvynso, a once-daily, single-tablet two-drug regimen of doravirine and islatravir, and Lipfendra (enlicitide), an oral PCSK9 inhibitor to help reduce LDL cholesterol in adults with hypercholesterolemia.
Some key candidates in late-stage development are sacituzumab tirumotecan or sac-TMT, an anti-TROP2 antibody-drug conjugate for multiple tumor types, MK-8591D/islatravir plus lenacapavir, a once-weekly oral treatment for HIV, and alimatravir, a monthly oral HIV PrEP candidate.
Merck is actively pursuing acquisitions to prepare for Keytruda’s 2028 patent expiration. Recent deals added Ohtuvayre through Verona Pharma, influenza candidate MK-1406 through Cidara, and potential blockbuster cancer drug MK-4208 through Terns Pharmaceuticals.
Declining Sales of MRK’s Gardasil & Other Vaccines
Merck’s Gardasil/Gardasil 9 franchise is facing a significant slowdown, with sales declining 9% in the first half of 2026 due to weaker demand in China, Japan and the United States. China remains the biggest challenge, as economic weakness has dampened demand and led to elevated channel inventories at partner Zhifei, prompting Merck to halt shipments temporarily.
Although limited shipments resumed in China in the second quarter under a revised agreement, the growing availability of lower-cost domestic HPV vaccines could further put pressure on Gardasil, an imported premium-priced vaccine. Gardasil China revenues are expected to remain immaterial for Merck in 2026. In the United States, Gardasil demand is being hurt by changes in vaccination recommendations, including greater use of single-dose schedules.
Sales of some other Merck vaccines, like Proquad, M-M-R II, Varivax, Rotateq and Vaxneuvance, also declined in the first half of 2026.
Keytruda’s 2028 Patent Loss a Key Risk for Merck
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.
Merck’s Januvia and Other Drugs Face Generic Pressure
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 lost market exclusivity in the United States in July 2026 and sales are expected to decline further in future quarters. Januvia and Janumet lost market exclusivity in the United States in May 2026 and Janumet XR in July 2026. Sales of Januvia/Janumet are expected to decline steeply in future quarters due to the government price setting in 2026 and 2027, the patent expiry in 2026 and ongoing competitive pressure.
MRK Share Price, Valuation & Estimates
Merck’s shares have risen 32.6% so far this year compared with an increase of 9.4% for the industry. The stock has also outperformed the sector as well as the S&P 500 index, as seen in the chart below.
From a valuation standpoint, Merck is slightly expensive. Going by the price/earnings ratio, the company’s shares currently trade at 17.44 forward earnings, slightly lower than 17.60 for the industry. The stock is trading above its 5-year mean of 12.98.
MRK Stock Valuation
Image Source: Zacks Investment Research
Estimates for MRK’s 2026 earnings have declined from $3.04 per share to $2.77 per share over the past 60 days, while those for 2027 have declined from $9.72 per share to $9.61 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.
It expects more than $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 faces several near-term challenges, including persistent challenges for Gardasil, potential competition for Keytruda, and rising competitive and generic pressure on some of its drugs. Near-term profitability remains affected by costs related to Merck’s various acquisitions. However, these acquisitions eventually benefit the company.
Meanwhile, its new products, strong progress in its pipeline, and business development and acquisitions have increased confidence that Merck may be able to maintain growth even after Keytruda loses exclusivity. Investors can continue to retain this Zacks Rank #3 (Hold) stock as its long-term prospects remain intact. Given the recent decline, MRK could prove to be a potential buying opportunity for long-term investors. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
View the Zacks #1 Rank List
Image: Bigstock
Merck Stock Down 7% in a Month: Is the Dip a Buying Opportunity?
Key Takeaways
Merck’s (MRK - Free Report) stock has declined 7.2% in a month. Investors are looking at this correction as a pullback after a strong run rather than a deterioration in its core business. The stock has surged roughly 60% over the past year. It also reached a 52-week high of about $157 in late August.
In general, investors have become more confident in Merck’s growth outlook and ability to offset the eventual patent cliff of its blockbuster cancer drug, Keytruda, after 2028. Keytruda continues to deliver solid growth, while newer products such as Winrevair, Welireg and Ohtuvayre are scaling rapidly. Merck has also been aggressively building its pipeline through acquisitions and partnerships, and investors are increasingly giving credit to these efforts. Merck's partnership with Moderna (MRNA - Free Report) around the personalized cancer vaccine intismeran autogene has also become more important.
Let’s understand all these factors in detail and analyze Merck’s strengths and weaknesses to understand how to play the stock in such a scenario.
Merck’s Keytruda Engine Continues to Power Top-Line Growth
Merck has more than six blockbuster drugs in its portfolio, with Keytruda as the primary top-line driver. Keytruda, approved for several types of cancer, alone accounts for more than 55% of the company’s pharmaceutical sales. In the United States, Keytruda is approved for more than 45 indications spanning 19 tumor types, along with two tumor-agnostic approvals, as well as for many of these indications worldwide.
The drug has played an instrumental role in driving Merck’s steady revenue growth over the past few years. 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. More than 2,800 clinical studies are currently evaluating Keytruda across multiple cancer types and treatment settings.
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, Merck is developing a personalized mRNA therapeutic cancer vaccine called intismeran autogene in combination with Keytruda in pivotal phase III studies for earlier-stage and adjuvant NSCLC and adjuvant melanoma. The combo therapy recently met both primary and secondary endpoints in a phase III study in certain patients with high-risk melanoma.
Merck’s subcutaneous formulation of Keytruda, known as Keytruda Qlex, was approved in the United States and EU in 2025 and generated sales of $590 million in the first half of 2026. Keytruda Qlex can offer substantially quicker administration time than the intravenous infusion of Keytruda.
Merck expects Keytruda to achieve peak sales of $35 billion by 2028. Merck’s other oncology drugs, Welireg, AstraZeneca (AZN - Free Report) -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 the mid-2030s.
Merck’s Pipeline Strengthens Its Outlook Beyond Keytruda
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 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.
Its new products, pulmonary arterial hypertension drug Winrevair, cancer drug Welireg and 21-valent pneumococcal conjugate vaccine Capvaxive, have begun to contribute significantly to top-line growth.
Some new products approved/launched recently are RSV antibody, Enflonsia (clesrovimab), Idvynso, a once-daily, single-tablet two-drug regimen of doravirine and islatravir, and Lipfendra (enlicitide), an oral PCSK9 inhibitor to help reduce LDL cholesterol in adults with hypercholesterolemia.
Some key candidates in late-stage development are sacituzumab tirumotecan or sac-TMT, an anti-TROP2 antibody-drug conjugate for multiple tumor types, MK-8591D/islatravir plus lenacapavir, a once-weekly oral treatment for HIV, and alimatravir, a monthly oral HIV PrEP candidate.
Merck is actively pursuing acquisitions to prepare for Keytruda’s 2028 patent expiration. Recent deals added Ohtuvayre through Verona Pharma, influenza candidate MK-1406 through Cidara, and potential blockbuster cancer drug MK-4208 through Terns Pharmaceuticals.
Declining Sales of MRK’s Gardasil & Other Vaccines
Merck’s Gardasil/Gardasil 9 franchise is facing a significant slowdown, with sales declining 9% in the first half of 2026 due to weaker demand in China, Japan and the United States. China remains the biggest challenge, as economic weakness has dampened demand and led to elevated channel inventories at partner Zhifei, prompting Merck to halt shipments temporarily.
Although limited shipments resumed in China in the second quarter under a revised agreement, the growing availability of lower-cost domestic HPV vaccines could further put pressure on Gardasil, an imported premium-priced vaccine. Gardasil China revenues are expected to remain immaterial for Merck in 2026. In the United States, Gardasil demand is being hurt by changes in vaccination recommendations, including greater use of single-dose schedules.
Sales of some other Merck vaccines, like Proquad, M-M-R II, Varivax, Rotateq and Vaxneuvance, also declined in the first half of 2026.
Keytruda’s 2028 Patent Loss a Key Risk for Merck
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.
Merck’s Januvia and Other Drugs Face Generic Pressure
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 lost market exclusivity in the United States in July 2026 and sales are expected to decline further in future quarters. Januvia and Janumet lost market exclusivity in the United States in May 2026 and Janumet XR in July 2026. Sales of Januvia/Janumet are expected to decline steeply in future quarters due to the government price setting in 2026 and 2027, the patent expiry in 2026 and ongoing competitive pressure.
MRK Share Price, Valuation & Estimates
Merck’s shares have risen 32.6% so far this year compared with an increase of 9.4% for the industry. The stock has also outperformed the sector as well as the S&P 500 index, as seen in the chart below.
Merck Stock Outperforms Industry, Sector & S&P 500
From a valuation standpoint, Merck is slightly expensive. Going by the price/earnings ratio, the company’s shares currently trade at 17.44 forward earnings, slightly lower than 17.60 for the industry. The stock is trading above its 5-year mean of 12.98.
MRK Stock Valuation
Estimates for MRK’s 2026 earnings have declined from $3.04 per share to $2.77 per share over the past 60 days, while those for 2027 have declined from $9.72 per share to $9.61 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.
It expects more than $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 faces several near-term challenges, including persistent challenges for Gardasil, potential competition for Keytruda, and rising competitive and generic pressure on some of its drugs. Near-term profitability remains affected by costs related to Merck’s various acquisitions. However, these acquisitions eventually benefit the company.
Meanwhile, its new products, strong progress in its pipeline, and business development and acquisitions have increased confidence that Merck may be able to maintain growth even after Keytruda loses exclusivity. Investors can continue to retain this Zacks Rank #3 (Hold) stock as its long-term prospects remain intact. Given the recent decline, MRK could prove to be a potential buying opportunity for long-term investors. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.