Merck & Co., Inc.

🇺🇸New York Stock Exchange
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Merck & Co., Inc. stock analysis MRK overview
Bullish +75

Merck Stock Looks Undervalued as KEYTRUDA Growth and Pipeline Offset Near-Term Headwinds - 24/7 Wall St.

📈 Merck reported Q1 2026 revenue of $16.29 billion, a 4.87% year-over-year increase that beat analyst consensus by 2.77%.

💰 Non-GAAP EPS reached -$1.28, surpassing the -$1.47 estimate despite a headline loss driven by a $9.0 billion Cidara acquisition charge.

🔑 KEYTRUDA generated $8.03 billion in revenue with a 12% increase, while WINREVAIR surged 88% to $525 million.

📉 Shares slipped 1.6% on the day of the report and are down 9.24% over the past month despite the earnings beat.

🎯 The 24/7 Wall St. price target is set at $135.70, implying 24.29% upside from the current price of $109.18 with a 90% confidence buy rating.

🚀 Management raised full-year revenue guidance to between $65.80 billion and $67 billion, along with non-GAAP EPS guidance of $5.04 to $5.16.

🔬 Upcoming catalysts include the June 19, 2026 WELIREG + KEYTRUDA adjuvant RCC PDUFA and the August 17, 2026 KEYTRUDA + Padcev MIBC decision.

⚠️ Bear case concerns include the KEYTRUDA patent cliff, a 47% drop in China revenue for GARDASIL, and three failed Phase 3 oncology trials.

🛡 Bulls argue that $14.8 billion in combined Cidara and Terns charges are investments in long-duration growth rather than immediate losses.

💸 The stock trades near 52-week lows with a forward P/E of 22x, an 82% gross margin, and a 2.94% dividend yield.

📊 Wall Street consensus shows 62% bullish sentiment with 18 buy/strong buy ratings versus zero sell ratings.

🔮 The bull-case scenario projects a stock price of $141.16 for a total return of 29.29%.

📉 The bear-case scenario estimates a floor price of $114.09, representing modest 4.5% upside from current levels.

🗓️ Significant events include the June 1, 2026 Oncology Investor Event at ASCO which could impact future projections.

Bullish Signals
  • Merck delivered a fourth consecutive earnings beat with Q1 2026 revenue of $16.29 billion, growing 4.87% year over year and beating consensus by 2.77%.
  • KEYTRUDA generated $8.03 billion in revenue representing a 12% increase, while WINREVAIR jumped 88% to $525 million.
  • Management raised full-year guidance to $65.80 billion to $67 billion in revenue and $5.04 to $5.16 in non-GAAP EPS.
  • The stock trades well below its 52-week high with a forward P/E of 22x, presenting an attractive valuation setup near current lows.
  • Wall Street consensus is 62% bullish with 18 buy/strong buy ratings versus zero sell ratings for the company.
  • Upcoming catalysts include the June 19, 2026 WELIREG + KEYTRUDA adjuvant RCC PDUFA and the August 17, 2026 KEYTRUDA + Padcev MIBC decision.
  • The bull-case scenario projects a total return of 29.29% with a price target of $141.16 based on pipeline execution.
  • Merck maintains an 82% gross margin and offers a defensive healthcare profile with a 2.94% dividend yield.
Risk Factors
  • Shares slipped 1.6% on the day of the earnings report and are down 9.24% over the past month despite beating estimates.
  • The company recorded a non-GAAP EPS loss of -$1.28, primarily driven by a one-time $9.0 billion acquisition charge related to Cidara.
  • GARDASIL revenue in China declined significantly by 47%, contributing to overall weakness in that franchise.
  • Three Phase 3 oncology trials (LITESPARK-012, KEYNOTE-975, and KEYNOTE-866) failed, raising concerns about pipeline execution.
  • The bear case scenario projects a stock price of $114.09, representing only modest 4.5% upside from current levels.
  • Significant downside risk exists if more Phase 3 trials fail or the China weakness spreads to other franchises.
Full Analysis
Merck (MRK) reported Q1 2026 revenue of $16.29 billion, representing a 4.87% year-over-year increase that beat consensus estimates by 2.77%. While the company recorded a non-GAAP EPS loss of -$1.28 against an estimate of -$1.47, this was primarily driven by a one-time $9.0 billion acquisition charge related to Cidara, with underlying operating performance remaining intact. The core oncology franchise KEYTRUDA generated $8.03 billion in revenue, up 12%, while the respiratory drug WINREVAIR saw significant growth of 88% to reach $525 million. Management has raised its full-year guidance, projecting revenue between $65.80 billion and $67 billion, with non-GAAP EPS expected to range from $5.04 to $5.16. The company's stock price slipped 1.6% on the day of the report but remains up 32.8% over the past year, trading near its 52-week lows despite a defensive healthcare profile and a 2.94% dividend yield. Analysts at 24/7 Wall St. maintain a buy rating with a price target of $135.70, citing a deep Phase 3 pipeline as a key driver for future growth to offset potential patent expirations on KEYTRUDA. Key upcoming catalysts include regulatory decisions and data readouts scheduled for mid-to-late 2026, specifically the June 19 PDUFA date for WELIREG + KEYTRUDA in adjuvant renal cell carcinoma, an August 17 decision regarding KEYTRUDA combined with Padcev for muscle-invasive bladder cancer, and a October 10 PDUFA for ifinatamab deruxtecan. While bears point to risks such as the KEYTRUDA patent cliff, a significant decline in GARDASIL revenue in China (down 47%), and three failed Phase 3 oncology trials, bulls argue that the combined $14.8 billion in acquisition charges from Cidara and Terns represent strategic investments for long-duration growth.