Merck & Co., Inc.

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Merck & Co., Inc. stock analysis MRK overview
Somewhat Bullish +45

The Zacks Analyst Blog UnitedHealth, Merck & Co., Qualcomm, EVI and Optex - Zacks Investment Research

📈 UnitedHealth Group (UNH) expects total revenues to exceed $439 billion in 2026, driven by Optum and UnitedHealthcare segments.

💊 Merck & Co. (MRK) shares gained 45.6% over the past year, outperforming the large-cap pharmaceuticals industry average of 19.9%.

🚗 Qualcomm continues to pivot toward a connected processor portfolio with over 1 million cars operating ADAS on Snapdragon Ride processors.

📊 EVI Industries reported revenues rising 24% in the December quarter, though net income dipped to $4.2 million as SG&A rose 26%.

🔭 Optex Systems saw Q1 FY26 orders rise 31.7% YoY to $7.9 million, driven by a doubling of periscope bookings.

⚠️ Merck faces near-term challenges including persistent issues for Gardasil in China and potential competition for Keytruda.

📉 Qualcomm handset demand is tied to uncertain memory supply and pricing, keeping chipset shipments below end demand.

💸 EVI Industries debt rose to $58 million under a variable-rate facility, increasing sensitivity to higher interest rates.

📉 Optex Systems gross margin declined and operating income fell sharply due to mix pressure and higher G&A expenses.

🔍 Zacks analysts reiterated a Neutral recommendation on UnitedHealth Group despite its strong revenue growth.

Bullish Signals
  • UnitedHealth Group has outperformed the Zacks Medical - HMOs industry over the past year with +2.6% gains versus -0.2% for the sector.
  • Merck & Co.'s blockbuster drug Keytruda and new products are driving sales, with Animal Health also contributing to growth.
  • Qualcomm has solid traction in the automotive business with more than 1 million cars operating ADAS and autonomy on Snapdragon Ride processors.
  • EVI Industries delivered solid top-line momentum with revenues rising 24% in the December quarter and 20% for the first six months of FY26.
  • Optex Systems demonstrated strengthening demand momentum with Q1 FY26 orders rising 31.7% YoY to $7.9 million.
  • Recent M&A deals have strengthened Merck's pipeline, increasing confidence that it can maintain growth even after Keytruda loses exclusivity in 2028.
  • Optex Systems has multi-year contract awards totaling more than $6 million extending production visibility into 2027.
Risk Factors
  • Merck & Co. faces persistent challenges for Gardasil in China and potential competition for its blockbuster drug Keytruda.
  • Qualcomm revenue missed estimates due to handset demand being tied to uncertain memory supply and pricing, driving a softer near-term outlook.
  • EVI Industries net income dipped to $4.2 million as SG&A rose 26%, outpacing revenue growth, which pressures earnings conversion.
  • Optex Systems gross margin declined and operating income fell sharply due to mix pressure and higher G&A expenses.
  • Qualcomm management expects China handset revenue to bottom in the fiscal third quarter, implying lower near-term revenue and profitability.
Full Analysis
Zacks Equity Research analysts released a daily blog post on May 12, 2026, featuring new research reports on UnitedHealth Group (UNH), Merck & Co. (MRK), Qualcomm (QCOM), EVI Industries (EVI), and Optex Systems (OPXS). The report highlights that UNH shares have outperformed the medical HMOs industry over the past year, driven by steady revenue growth from its Optum and UnitedHealthcare segments, with total revenues expected to exceed $439 billion in 2026. Merck & Co. (MRK) shares have significantly outperformed the large-cap pharmaceuticals industry, gaining 45.6% over the past year compared to the sector's 19.9%. The company beat first-quarter earnings and sales estimates, bolstered by its blockbuster drug Keytruda and contributions from its Animal Health division. Analysts note that while Keytruda faces patent exclusivity loss in 2028, recent M&A deals have strengthened the pipeline to maintain growth momentum. Qualcomm reported mixed second-quarter fiscal 2026 results where adjusted earnings beat estimates but revenue missed targets. The company is pivoting toward a broader connected processor portfolio with strong traction in automotive ADAS and autonomy. However, handset demand remains constrained by uncertain memory supply and pricing, leading to lower near-term guidance for revenue and profitability. Micro-cap EVI Industries delivered solid top-line momentum with revenues rising 24% in the December quarter, though net income dipped due to a sharp increase in SG&A expenses. Similarly, Optex Systems showed strengthening demand with Q1 FY26 orders rising 31.7%, driven by optical assemblies, but faced declining gross margins and a decrease in backlog. The report concludes with promotional material for Zacks' stock-picking strategies and standard investment disclaimers.