Merck (MRK)
Market Price (8/12/2026): $130.44 | Market Cap: $322.2 BilInvestor Relations Sector: Health Care | Industry: Pharmaceuticals
Merck (MRK)
Market Price (8/12/2026): $130.44Market Cap: $322.2 BilSector: Health CareIndustry: Pharmaceuticals
Investment Highlights Why It Matters Detailed financial logic regarding cash flow yields vs trend-riding momentum.
Attractive cash flow generationCFO/Rev LTMCash Flow from Operations / Revenue (Sales), Last Twelve Months (LTM) is 30%, FCF/Rev LTMFree Cash Flow / Revenue (Sales), Last Twelve Months (LTM) is 24%, CFO LTM is 20 Bil, FCF LTM is 16 Bil Attractive yieldDividend Yield is 2.6% Stock buyback supportStock Buyback 3Y Total is 8.9 Bil Low stock price volatilityVol 12M is 27% Megatrend and thematic driversMegatrends include Biotechnology & Genomics, Precision Medicine, and Aging Population & Chronic Disease. Themes include Biopharmaceutical R&D, Show more. | Trading close to highsDist 52W High is -1.1%, Dist 3Y High is -1.1% Weak multi-year price returns2Y Excs Rtn is -22%, 3Y Excs Rtn is -36% | Expensive valuation multiplesP/EBITPrice/EBIT or Price/(Operating Income) ratio is 42x, P/EPrice/Earnings or Price/(Net Income) is 102x Key risksMRK key risks include [1] the impending 2028 patent expiration of its blockbuster drug, Show more. |
| Attractive cash flow generationCFO/Rev LTMCash Flow from Operations / Revenue (Sales), Last Twelve Months (LTM) is 30%, FCF/Rev LTMFree Cash Flow / Revenue (Sales), Last Twelve Months (LTM) is 24%, CFO LTM is 20 Bil, FCF LTM is 16 Bil |
| Attractive yieldDividend Yield is 2.6% |
| Stock buyback supportStock Buyback 3Y Total is 8.9 Bil |
| Low stock price volatilityVol 12M is 27% |
| Megatrend and thematic driversMegatrends include Biotechnology & Genomics, Precision Medicine, and Aging Population & Chronic Disease. Themes include Biopharmaceutical R&D, Show more. |
| Trading close to highsDist 52W High is -1.1%, Dist 3Y High is -1.1% |
| Weak multi-year price returns2Y Excs Rtn is -22%, 3Y Excs Rtn is -36% |
| Expensive valuation multiplesP/EBITPrice/EBIT or Price/(Operating Income) ratio is 42x, P/EPrice/Earnings or Price/(Net Income) is 102x |
| Key risksMRK key risks include [1] the impending 2028 patent expiration of its blockbuster drug, Show more. |
Qualitative Assessment
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Merck (MRK) stock has gained about 20% since 4/30/2026 because of the following key factors:
1. Strong Fiscal Q2 2026 Financial Performance and Raised Revenue Outlook.
Merck reported worldwide sales of $16.61 billion for fiscal Q2 2026 (ending June 30, 2026), representing a 5% increase year-over-year (4% excluding foreign exchange impacts), which surpassed analysts' average estimates of $16.36 billion. The company also raised and narrowed its full-year 2026 revenue guidance to between $66.3 billion and $67.3 billion, an increase from its previous forecast of $65.8 billion to $67.0 billion. Although Merck reported a non-GAAP loss of $0.13 per share, this was primarily due to a one-time $2.31 per share charge related to the acquisition of Terns Pharmaceuticals and was a narrower loss than the analyst consensus of $0.26 to $0.27 per share.
2. Robust Growth from Keytruda and Recently Launched Products.
The Keytruda family of products, including Keytruda QLEX, generated $8.4 billion in sales during fiscal Q2 2026, marking a 4% increase and exceeding analyst estimates of approximately $8.07 billion. Notably, Keytruda QLEX, the subcutaneous formulation, contributed $463 million in sales, benefiting from increased adoption after its permanent J-code was established in April 2026. Newer product launches also demonstrated significant momentum, with WINREVAIR sales surging 75% to $588 million and WELIREG sales increasing 67% to $271 million in fiscal Q2 2026.
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Merck (MRK) stock has gained about 20% since 4/30/2026 because of the following key factors:
1. Strong Fiscal Q2 2026 Financial Performance and Raised Revenue Outlook.
Merck reported worldwide sales of $16.61 billion for fiscal Q2 2026 (ending June 30, 2026), representing a 5% increase year-over-year (4% excluding foreign exchange impacts), which surpassed analysts' average estimates of $16.36 billion. The company also raised and narrowed its full-year 2026 revenue guidance to between $66.3 billion and $67.3 billion, an increase from its previous forecast of $65.8 billion to $67.0 billion. Although Merck reported a non-GAAP loss of $0.13 per share, this was primarily due to a one-time $2.31 per share charge related to the acquisition of Terns Pharmaceuticals and was a narrower loss than the analyst consensus of $0.26 to $0.27 per share.
2. Robust Growth from Keytruda and Recently Launched Products.
The Keytruda family of products, including Keytruda QLEX, generated $8.4 billion in sales during fiscal Q2 2026, marking a 4% increase and exceeding analyst estimates of approximately $8.07 billion. Notably, Keytruda QLEX, the subcutaneous formulation, contributed $463 million in sales, benefiting from increased adoption after its permanent J-code was established in April 2026. Newer product launches also demonstrated significant momentum, with WINREVAIR sales surging 75% to $588 million and WELIREG sales increasing 67% to $271 million in fiscal Q2 2026.
3. Positive Regulatory Approvals and Advancements in the Pipeline.
Merck received U.S. FDA approval for LIPFENDRA (enlicitide), marking it as the first and only once-daily oral PCSK9 inhibitor to reduce LDL-C in adults with hypercholesterolemia. Additionally, positive Phase 3 clinical trial results were announced for sacituzumab tirumotecan (sac-TMT) in endometrial cancer and tulisokibart in ulcerative colitis, reinforcing the strength of its pipeline. The FDA also approved the combination of KEYTRUDA and KEYTRUDA QLEX with Padcev as a neoadjuvant and adjuvant treatment for muscle-invasive bladder cancer on July 10, 2026. Further bolstering the pipeline, positive Phase 3 results were reported for the once-weekly investigational oral HIV treatment regimen of Islatravir and Lenacapavir, developed in collaboration with Gilead Sciences.
4. Upgraded Analyst Sentiment.
Analyst sentiment for Merck shifted positively during the period, with the consensus recommendation moving from predominantly "Hold" to "Buy" in August 2026. Out of 36 analysts, 16 recommended "Buy" and 9 recommended "Strong Buy" for the stock.
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Stock Movement Drivers
Fundamental Drivers
The 20.3% change in MRK stock from 4/30/2026 to 8/11/2026 was primarily driven by a 589.1% change in the company's P/E Multiple.| (LTM values as of) | 4302026 | 8112026 | Change |
|---|---|---|---|
| Stock Price ($) | 108.40 | 130.42 | 20.3% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 65,011 | 66,569 | 2.4% |
| Net Income Margin (%) | 28.1% | 4.8% | -83.0% |
| P/E Multiple | 14.7 | 101.5 | 589.1% |
| Shares Outstanding (Mil) | 2,481 | 2,470 | 0.4% |
| Cumulative Contribution | 20.3% |
Market Drivers
4/30/2026 to 8/11/2026| Return | Correlation | |
|---|---|---|
| MRK | 20.3% | |
| Market (SPY) | 7.2% | -16.9% |
| Sector (XLV) | 15.1% | 70.4% |
Fundamental Drivers
The 20.0% change in MRK stock from 1/31/2026 to 8/11/2026 was primarily driven by a 612.7% change in the company's P/E Multiple.| (LTM values as of) | 1312026 | 8112026 | Change |
|---|---|---|---|
| Stock Price ($) | 108.68 | 130.42 | 20.0% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 64,235 | 66,569 | 3.6% |
| Net Income Margin (%) | 29.6% | 4.8% | -83.9% |
| P/E Multiple | 14.2 | 101.5 | 612.7% |
| Shares Outstanding (Mil) | 2,495 | 2,470 | 1.0% |
| Cumulative Contribution | 20.0% |
Market Drivers
1/31/2026 to 8/11/2026| Return | Correlation | |
|---|---|---|
| MRK | 20.0% | |
| Market (SPY) | 11.7% | 0.9% |
| Sector (XLV) | 9.0% | 66.6% |
Fundamental Drivers
The 72.5% change in MRK stock from 7/31/2025 to 8/11/2026 was primarily driven by a 828.0% change in the company's P/E Multiple.| (LTM values as of) | 7312025 | 8112026 | Change |
|---|---|---|---|
| Stock Price ($) | 75.59 | 130.42 | 72.5% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 63,922 | 66,569 | 4.1% |
| Net Income Margin (%) | 27.3% | 4.8% | -82.5% |
| P/E Multiple | 10.9 | 101.5 | 828.0% |
| Shares Outstanding (Mil) | 2,523 | 2,470 | 2.1% |
| Cumulative Contribution | 72.5% |
Market Drivers
7/31/2025 to 8/11/2026| Return | Correlation | |
|---|---|---|
| MRK | 72.5% | |
| Market (SPY) | 22.9% | 4.8% |
| Sector (XLV) | 30.5% | 67.9% |
Fundamental Drivers
The 34.1% change in MRK stock from 7/31/2023 to 8/11/2026 was primarily driven by a 436.0% change in the company's P/E Multiple.| (LTM values as of) | 7312023 | 8112026 | Change |
|---|---|---|---|
| Stock Price ($) | 97.24 | 130.42 | 34.1% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 57,869 | 66,569 | 15.0% |
| Net Income Margin (%) | 22.5% | 4.8% | -78.8% |
| P/E Multiple | 18.9 | 101.5 | 436.0% |
| Shares Outstanding (Mil) | 2,538 | 2,470 | 2.8% |
| Cumulative Contribution | 34.1% |
Market Drivers
7/31/2023 to 8/11/2026| Return | Correlation | |
|---|---|---|
| MRK | 34.1% | |
| Market (SPY) | 74.3% | 17.3% |
| Sector (XLV) | 31.1% | 61.1% |
Price Returns Compared
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | Total [1] | |
|---|---|---|---|---|---|---|---|
| Returns | |||||||
| MRK Return | 2% | 49% | 1% | -6% | 10% | 26% | 99% |
| Peers Return | 36% | 15% | -3% | 12% | 24% | 19% | 149% |
| S&P 500 Return | 27% | -19% | 24% | 23% | 16% | 13% | 106% |
Monthly Win Rates [3] | |||||||
| MRK Win Rate | 42% | 67% | 42% | 33% | 50% | 75% | |
| Peers Win Rate | 62% | 63% | 40% | 53% | 62% | 60% | |
| S&P 500 Win Rate | 75% | 42% | 67% | 75% | 67% | 50% | |
Max Drawdowns [4] | |||||||
| MRK Max Drawdown | -20% | -11% | -14% | -27% | -27% | -11% | |
| Peers Max Drawdown | -17% | -19% | -26% | -20% | -23% | -16% | |
| S&P 500 Max Drawdown | -5% | -25% | -10% | -8% | -19% | -9% | |
[1] Cumulative total returns since the beginning of 2021
[2] Peers: PFE, JNJ, LLY, ABBV, BMY. See MRK Returns vs. Peers.
[3] Win Rate = % of calendar months in which monthly returns were positive
[4] Max drawdown represents maximum peak-to-trough decline within a year
[5] 2026 data is for the year up to 8/11/2026 (YTD)
How Low Can It Go
| Event | MRK | S&P 500 |
|---|---|---|
| 2025 US Tariff Shock | ||
| % Loss | -13.4% | -18.8% |
| % Gain to Breakeven | 15.5% | 23.1% |
| Time to Breakeven | 71 days | 79 days |
| 2024 Yen Carry Trade Unwind | ||
| % Loss | -12.7% | -7.8% |
| % Gain to Breakeven | 14.5% | 8.5% |
| Time to Breakeven | 549 days | 18 days |
| 2020 COVID-19 Crash | ||
| % Loss | -18.4% | -33.7% |
| % Gain to Breakeven | 22.5% | 50.9% |
| Time to Breakeven | 16 days | 140 days |
| 2015-2016 China Devaluation / Global Growth Scare | ||
| % Loss | -18.2% | -12.2% |
| % Gain to Breakeven | 22.3% | 13.9% |
| Time to Breakeven | 277 days | 62 days |
| 2014-2016 Oil Price Collapse | ||
| % Loss | -16.2% | -6.8% |
| % Gain to Breakeven | 19.4% | 7.3% |
| Time to Breakeven | 204 days | 15 days |
| 2011 US Debt Ceiling Crisis & European Contagion | ||
| % Loss | -17.4% | -17.9% |
| % Gain to Breakeven | 21.1% | 21.8% |
| Time to Breakeven | 93 days | 123 days |
In The Past
Merck's stock fell -13.4% during the 2025 US Tariff Shock. Such a loss loss requires a 15.5% gain to breakeven.
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| Event | MRK | S&P 500 |
|---|---|---|
| 2008-2009 Global Financial Crisis | ||
| % Loss | -62.5% | -53.4% |
| % Gain to Breakeven | 166.4% | 114.4% |
| Time to Breakeven | 1319 days | 1085 days |
In The Past
Merck's stock fell -13.4% during the 2025 US Tariff Shock. Such a loss loss requires a 15.5% gain to breakeven.
Preserve Wealth
Limiting losses and compounding gains is essential to preserving wealth.
Asset Allocation
Actively managed asset allocation strategies protect wealth. Learn more.
About Merck (MRK)
Merck & Co., Inc. (MRK) operates as a global healthcare company, dedicated to improving health for both humans and animals. Its business is strategically divided into two primary segments: Pharmaceutical and Animal Health. This structure allows Merck to develop and deliver a comprehensive range of health solutions worldwide, underpinned by extensive research and manufacturing capabilities.
The Pharmaceutical segment focuses on human health, offering a robust portfolio of prescription medicines and vaccines. Its key product areas include oncology, immunology, neuroscience, virology, cardiovascular, diabetes, and hospital acute care, alongside vital preventive vaccines for all age groups. Merck distributes these products to a wide array of customers, including drug wholesalers and retailers, hospitals, government agencies, managed health care providers, and directly to physicians.
Complementing its human health focus, Merck's Animal Health segment provides innovative veterinary pharmaceuticals, vaccines, and health management solutions. This segment also develops advanced digitally connected products for animal identification, traceability, and monitoring. By serving veterinarians and animal producers globally, Merck contributes to animal well-being and livestock productivity.
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Here are 1-3 brief analogies for Merck (MRK):
- Like Pfizer, but with a significant focus on animal health in addition to human pharmaceuticals.
- Similar to the pharmaceutical and vaccine divisions of Johnson & Johnson, plus a major animal health business.
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- Human Pharmaceutical Products: Merck develops and markets pharmaceutical drugs targeting various human diseases, including oncology, hospital acute care, immunology, neuroscience, virology, cardiovascular, and diabetes.
- Human Vaccine Products: The company offers a range of vaccine products for the prevention of diseases in pediatric, adolescent, and adult populations.
- Veterinary Pharmaceutical Products: Merck discovers, develops, manufactures, and markets medicinal pharmaceuticals for animal health.
- Animal Vaccines: The company provides vaccines specifically designed to protect animals from various diseases.
- Animal Health Management Solutions and Services: Merck offers health management solutions and services aimed at improving the overall well-being and productivity of animals.
- Digitally Connected Animal Identification & Monitoring Products: The company provides digital products for the identification, traceability, and monitoring of animals.
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Merck (MRK) primarily sells its products to other companies and organizations rather than directly to individuals. Based on the company description, its major customers are intermediaries and healthcare providers. While specific customer names are not provided in the background, the following public companies represent typical major customers within the described categories:
Drug Wholesalers
These companies act as major distributors of pharmaceutical products from manufacturers like Merck to pharmacies, hospitals, and other healthcare providers.
- McKesson Corporation (MCK)
- AmerisourceBergen Corporation (ABC)
- Cardinal Health, Inc. (CAH)
Retail Pharmacies
Large pharmacy chains are significant purchasers and distributors of Merck's pharmaceutical products to the end consumer.
- CVS Health Corporation (CVS)
- Walgreens Boots Alliance, Inc. (WBA)
Managed Health Care Providers and Pharmacy Benefit Managers (PBMs)
These organizations manage healthcare plans and prescription drug benefits for large populations, influencing drug purchasing and formularies.
- UnitedHealth Group Inc. (UNH)
- The Cigna Group (CI)
- Elevance Health, Inc. (ELV)
Hospital Systems
Large hospital networks directly procure a range of pharmaceutical products for patient care.
- HCA Healthcare, Inc. (HCA)
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Robert M. Davis, Chairman and Chief Executive Officer
Robert M. Davis is the Chairman of the Board and Chief Executive Officer of Merck & Co., Inc.. He joined Merck in 2014 as the Chief Financial Officer, with additional responsibilities for real estate operations, corporate strategy, and business development. In 2016, his role expanded to include information technology and procurement, forming Global Services. He became President in April 2021, and then CEO and a member of the board of directors on July 1, 2021. Prior to joining Merck, Mr. Davis was corporate vice president and president of Baxter’s medical products business. During his time at Baxter, he also held positions such as president of Baxter's renal business, chief financial officer, and treasurer. Before his tenure at Baxter, he spent 14 years at Eli Lilly and Company in various roles of increasing responsibility, including Director of Corporate Financial Planning.
Caroline Litchfield, Executive Vice President and Chief Financial Officer
Caroline Litchfield serves as the Executive Vice President and Chief Financial Officer for Merck, overseeing the company's finance, procurement, and real estate operations. She began her career at Merck in 1990 within its U.K. business and has since held numerous positions of increasing responsibility in country, regional, and global finance functions. Ms. Litchfield previously served as the company's treasurer, responsible for treasury, tax, and investor relations. From 2014 to 2018, she led finance for Human Health, Merck's largest business. She was also instrumental in the integration of Merck and Schering-Plough after their 2009 merger, serving as vice president and finance lead for the Emerging Markets region. She was appointed Executive Vice President and CFO, effective April 1, 2021. In June 2024, she was elected to the board of directors for Verizon.
Dean Y. Li, M.D., Ph.D., Executive Vice President and President, Merck Research Laboratories
Dean Y. Li is the Executive Vice President and President of Merck Research Laboratories, where he leads the company's global human vaccines and therapeutics research and development organization. He joined Merck in 2017, taking on leadership roles within the Translational Medicine and Discovery functions. Dr. Li was appointed President of Merck Research Laboratories in January 2021. Before joining Merck, he held positions of increasing responsibility in translational medical research at the University of Utah.
Sanat Chattopadhyay, Executive Vice President and President, Merck Manufacturing Division
Sanat Chattopadhyay is the Executive Vice President and President of the Merck Manufacturing Division. His professional background includes experience with companies such as Pfizer and Sanofi. He has an educational background that includes studies at Jadavpur University and NITIE.
Richard R. DeLuca, Jr., Executive Vice President and President, Merck Animal Health
Richard R. DeLuca, Jr. holds the position of Executive Vice President and President of Merck Animal Health.
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- Keytruda Patent Cliff: The most significant risk for Merck is the impending patent expiration of its flagship oncology drug, Keytruda (pembrolizumab). Keytruda's primary U.S. patents are set to expire in late 2028, with some extensions potentially pushing exclusivity to 2029. This drug is a major revenue driver for Merck, accounting for nearly half of its pharmaceutical sales in 2024 and 40% in 2023. Analysts project Keytruda sales to peak around $33–34 billion in 2028, followed by a substantial decline of approximately 19% to about $27.4 billion by 2029 as biosimilars enter the U.S. market. Merck is actively pursuing mitigation strategies, including developing a subcutaneous formulation (Keytruda Qlex) that received FDA approval in September 2025, which may help retain patient loyalty and extend some protection, possibly until 2040 or longer for specific formulations. The company is also implementing a $3 billion cost-cutting initiative and investing in new product launches and pipeline development to offset the anticipated revenue decline.
- Loss of Exclusivity for Other Key Products: Beyond Keytruda, Merck faces a broader "loss-of-exclusivity (LOE) wave" for several other significant pharmaceutical products between 2025 and 2029, putting nearly half of its 2024 pharmaceutical revenue at risk. Notably, Januvia/Janumet, Lenvima (in partnership with Eisai), and Gardasil 9 are also facing patent expirations or generic competition around the same period. For instance, U.S. generics for Januvia are expected by mid-2026, and Gardasil 9 U.S. patents expire in 2028. This collective expiration of patents on major revenue-generating drugs presents a significant challenge to Merck's market share and overall revenues.
- Regulatory Changes and Pricing Pressures: Merck, as a global pharmaceutical company, is continuously subject to evolving and increasingly stringent regulatory requirements, particularly concerning drug pricing and reimbursement. With rising global healthcare expenditures, governments worldwide are increasing pressure on pharmaceutical companies, which can negatively impact product profitability and the success of market launches. The Inflation Reduction Act (IRA) in the U.S., for example, includes Medicare price cuts that are active from January 2028, further contributing to pricing pressures.
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- The rapid advancement and expansion of mRNA technology by competitors, potentially displacing Merck's traditional vaccine platforms and certain therapeutic areas.
- The implementation and potential expansion of government-mandated drug price negotiation (e.g., under the U.S. Inflation Reduction Act), which threatens the profitability and R&D investment model for Merck's pharmaceutical products.
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Merck (MRK) operates in diverse healthcare markets, with substantial addressable markets for its main products and services across both its Pharmaceutical and Animal Health segments.
Pharmaceutical Segment
- Oncology: The global oncology market size was estimated at approximately USD 225.01 billion in 2024 and is projected to reach around USD 668.26 billion by 2034. North America held approximately a 46% share of this market in 2024.
- Hospital Acute Care: The global acute hospital care market generated a revenue of USD 3,344,042.1 million (or USD 3.34 trillion) in 2023 and is expected to reach USD 4,903,896.5 million (or USD 4.9 trillion) by 2030. North America was the largest revenue-generating market in 2023, accounting for 55.8% of the global market.
- Immunology: The global immunology market size was valued at USD 108.40 billion in 2024 and is estimated to hit around USD 286.38 billion by 2034. In 2024, North America dominated the global market with the largest share of 53%.
- Neuroscience: The global neuroscience market generated a revenue of USD 44,653.7 million in 2023 and is expected to reach USD 65,224.5 million by 2030. North America was the largest revenue-generating market in 2023.
- Virology: The global virology market size was valued at USD 2.55 billion in 2024 and is projected to reach USD 4.51 billion by 2033. North America was the largest contributor to this market in 2024.
- Cardiovascular: The global cardiovascular drugs market size is calculated at USD 155.96 billion in 2025 and is predicted to increase to approximately USD 214.72 billion by 2034.
- Diabetes: The global diabetes drugs market size was valued at USD 101.48 billion in 2025 and is projected to grow to USD 283.36 billion by 2034. North America dominated the diabetes drugs market with a market share of 49.95% in 2025.
- Vaccines (Human Health): The global human vaccines market was valued at USD 82.80 billion in 2024 and is expected to reach USD 186.73 billion by 2032. North America dominated the vaccine market with the largest revenue share of 38.3% in 2024.
Animal Health Segment
- Veterinary Pharmaceuticals, Vaccines, and Health Management Solutions: The global animal health market size was valued at USD 67.92 Billion in 2024 and is poised to grow to USD 128.05 Billion by 2033. North America held a significant market share of 44.9% in 2025.
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Merck (MRK) anticipates several key drivers to fuel its future revenue growth over the next two to three years:
- Accelerated Launch of New Products and Pipeline Expansion: Merck is intensifying its efforts to launch new drugs and has substantially expanded its late-stage pipeline. The company projects approximately $50 billion in revenue from new growth drivers by the early 2030s, contributing to a target of $70 billion by the mid-2030s. This includes a focus on 10 major programs, all identified as multibillion-dollar opportunities, with several already launched or having positive Phase III clinical trial data.
- Growth in Cardiometabolic and Respiratory Treatments: This therapeutic area is expected to be a significant contributor to future sales, with Merck forecasting nearly $20 billion from these treatments, an increase from previous estimates. New products like Winrevair, particularly for pulmonary arterial hypertension, are anticipated to drive sustained growth.
- Expansion in Infectious Disease Medications: Merck has significantly raised its projections for infectious disease drugs, expecting them to generate approximately $15 billion in sales, a substantial increase from earlier forecasts.
- Sustained Performance and Pipeline Augmentation in Oncology: While Keytruda continues to be a major revenue driver, particularly with increased uptake in earlier-stage cancers and strong international demand, Merck is actively fortifying its oncology pipeline through new product launches and strategic acquisitions to mitigate the impact of future patent expirations. Products like Welireg are also noted as growth drivers.
- Continued Growth in the Animal Health Segment: The Animal Health segment is consistently identified as a source of revenue growth, propelled by strong demand for companion animal products, such as the Bravecto line, favorable pricing strategies, and increased demand for livestock products. Acquisitions, such as the Elanco aqua business, are also expected to contribute to this segment's expansion.
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Capital Allocation Decisions of Merck (MRK) (2021-2025)
Share Repurchases
- Merck's Board of Directors authorized a new $10 billion stock repurchase program in January 2025, with no specified expiration date.
- The company executed annual share buybacks of $1.346 billion in 2023 and $1.306 billion in 2024.
- For the full year 2025, Merck's total share repurchases amounted to approximately $5.13 billion.
Inbound Investments
- In November 2025, Merck secured $700 million in non-refundable funding from Blackstone Life Sciences to support the development of sacituzumab tirumotecan (sac-TMT), an investigational antibody-drug conjugate for various cancer types.
Outbound Investments
- Merck acquired Acceleron Pharma for $11.5 billion in September 2021.
- In April 2023, the company acquired Prometheus Biosciences for $10.8 billion.
- Merck announced an agreement in early July 2025 to acquire Verona Pharma for approximately $10 billion.
Capital Expenditures
- Merck's capital expenditures increased from $3.123 billion in 2023 to $3.475 billion in 2024.
- For the full fiscal year 2025, investment spending included $4.11 billion in capital expenditures.
- The company intends to reinvest savings from a multi-year optimization initiative into higher-growth areas of its pipeline development and to expand its long-term product portfolio.
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Peer Comparisons
| Peers to compare with: |
Financials
| Median | |
|---|---|
| Name | |
| Mkt Price | 190.25 |
| Mkt Cap | 382.3 |
| Rev LTM | 65,478 |
| Op Inc LTM | 19,434 |
| FCF LTM | 14,812 |
| FCF 3Y Avg | 13,816 |
| CFO LTM | 19,737 |
| CFO 3Y Avg | 16,454 |
Growth & Margins
| Median | |
|---|---|
| Name | |
| Rev Chg LTM | 6.3% |
| Rev Chg 3Y Avg | 4.7% |
| Rev Chg Q | 6.2% |
| QoQ Delta Rev Chg LTM | 1.5% |
| Op Inc Chg LTM | 30.2% |
| Op Inc Chg 3Y Avg | 29.5% |
| Op Mgn LTM | 27.5% |
| Op Mgn 3Y Avg | 24.0% |
| QoQ Delta Op Mgn LTM | 0.1% |
| CFO/Rev LTM | 29.1% |
| CFO/Rev 3Y Avg | 28.0% |
| FCF/Rev LTM | 23.0% |
| FCF/Rev 3Y Avg | 22.0% |
Valuation
| Median | |
|---|---|
| Name | |
| Mkt Cap | 382.3 |
| P/S | 5.6 |
| P/Op Inc | 22.0 |
| P/EBIT | 25.1 |
| P/E | 37.8 |
| P/CFO | 19.4 |
| Total Yield | 4.8% |
| Dividend Yield | 2.6% |
| FCF Yield 3Y Avg | 5.4% |
| D/E | 0.2 |
| Net D/E | 0.1 |
Returns
| Median | |
|---|---|
| Name | |
| 1M Rtn | 3.9% |
| 3M Rtn | 16.7% |
| 6M Rtn | 11.6% |
| 12M Rtn | 49.2% |
| 3Y Rtn | 48.1% |
| 1M Excs Rtn | 1.1% |
| 3M Excs Rtn | 13.8% |
| 6M Excs Rtn | 0.3% |
| 12M Excs Rtn | 28.4% |
| 3Y Excs Rtn | -20.6% |
Comparison Analyses
Segment Financials
Revenue by Segment| $ Mil | 2025 | 2024 | 2023 | 2022 | 2021 |
|---|---|---|---|---|---|
| Pharmaceutical | 58,142 | 57,400 | 53,583 | 52,005 | 42,754 |
| Animal Health | 6,354 | 5,877 | 5,625 | 5,550 | 5,568 |
| Other | 515 | 891 | 907 | 1,728 | 382 |
| Total | 65,011 | 64,168 | 60,115 | 59,283 | 48,704 |
| $ Mil | 2015 | 2014 | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|
| Pharmaceutical | 21,658 | 22,164 | 22,983 | 25,852 | 25,617 |
| Other segment | 1,659 | 2,546 | 3,094 | ||
| Other | 810 | 539 | 19 | 26 | 90 |
| Corporate | -17,199 | -19,579 | -19,736 | -19,429 | -20,260 |
| All other segment revenues | 3,163 | 2,703 | |||
| Total | 6,928 | 5,670 | 6,360 | 9,612 | 8,150 |
Price Behavior
| Market Price | $130.42 | |
| Market Cap ($ Bil) | 322.4 | |
| First Trading Date | 01/02/1970 | |
| Distance from 52W High | -1.1% | |
| 50 Days | 200 Days | |
| DMA Price | $124.14 | $111.96 |
| DMA Trend | up | up |
| Distance from DMA | 5.1% | 16.5% |
| 3M | 1YR | |
| Volatility | 29.8% | 27.5% |
| Downside Capture | -76.68 | -22.19 |
| Upside Capture | 5.83 | 42.64 |
| Correlation (SPY) | -17.4% | 6.2% |
| 1M | 2M | 3M | 6M | 1Y | 3Y | |
|---|---|---|---|---|---|---|
| Beta | -0.42 | -0.41 | -0.33 | 0.05 | 0.13 | 0.29 |
| Up Beta | -0.40 | -0.60 | -0.93 | 0.36 | 0.50 | 0.40 |
| Down Beta | -0.40 | -0.24 | -0.08 | -0.00 | -0.23 | 0.32 |
| Up Capture | -31% | -9% | 20% | 14% | 34% | 6% |
| Bmk +ve Days | 11 | 22 | 35 | 67 | 138 | 427 |
| Stock +ve Days | 11 | 24 | 35 | 66 | 131 | 384 |
| Down Capture | -56% | -81% | -83% | -37% | -25% | 33% |
| Bmk -ve Days | 11 | 21 | 28 | 59 | 114 | 326 |
| Stock -ve Days | 11 | 19 | 28 | 60 | 121 | 367 |
[1] Upside and downside betas calculated using positive and negative benchmark daily returns respectively
Based On 1-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with MRK | |
|---|---|---|---|---|
| MRK | 67.4% | 27.5% | 1.85 | - |
| Sector ETF (XLV) | 30.9% | 15.5% | 1.53 | 68.6% |
| Equity (SPY) | 22.1% | 12.8% | 1.28 | 5.9% |
| Gold (GLD) | 28.2% | 28.4% | 0.86 | 3.2% |
| Commodities (DBC) | 37.4% | 20.1% | 1.47 | -14.2% |
| Real Estate (VNQ) | 12.5% | 13.8% | 0.61 | 34.5% |
| Bitcoin (BTCUSD) | -45.3% | 42.9% | -1.28 | -1.4% |
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Based On 5-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with MRK | |
|---|---|---|---|---|
| MRK | 14.8% | 24.1% | 0.54 | - |
| Sector ETF (XLV) | 6.2% | 15.0% | 0.23 | 56.8% |
| Equity (SPY) | 13.3% | 17.2% | 0.60 | 19.6% |
| Gold (GLD) | 18.8% | 18.6% | 0.82 | 1.1% |
| Commodities (DBC) | 9.3% | 19.6% | 0.36 | -1.1% |
| Real Estate (VNQ) | 1.9% | 18.9% | -0.00 | 25.8% |
| Bitcoin (BTCUSD) | 10.9% | 52.8% | 0.39 | 4.5% |
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Based On 10-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with MRK | |
|---|---|---|---|---|
| MRK | 12.2% | 23.1% | 0.49 | - |
| Sector ETF (XLV) | 10.1% | 16.6% | 0.49 | 64.3% |
| Equity (SPY) | 15.3% | 17.9% | 0.73 | 38.3% |
| Gold (GLD) | 12.0% | 16.2% | 0.61 | 2.3% |
| Commodities (DBC) | 7.9% | 18.0% | 0.35 | 8.8% |
| Real Estate (VNQ) | 4.5% | 20.7% | 0.18 | 36.4% |
| Bitcoin (BTCUSD) | 59.4% | 66.1% | 0.99 | 4.5% |
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Returns Analyses
Earnings Returns History
Updated 8/12/2026| Forward Returns | |||
|---|---|---|---|
| Earnings Date | 1D Returns | 5D Returns | 21D Returns |
| 8/4/2026 | 0.2% | 2.5% | |
| 4/30/2026 | -1.6% | 2.4% | 7.0% |
| 2/3/2026 | 2.2% | 3.8% | 6.1% |
| 10/30/2025 | -0.3% | -2.5% | 17.6% |
| 7/29/2025 | -1.7% | -5.0% | 1.1% |
| 4/24/2025 | 1.4% | 8.2% | -1.1% |
| 2/4/2025 | -9.1% | -13.4% | -6.6% |
| 10/31/2024 | -2.4% | -3.9% | -3.0% |
| ... | |||
| SUMMARY STATS | |||
| # Positive | 11 | 12 | 11 |
| # Negative | 14 | 13 | 13 |
| Median Positive | 1.9% | 3.2% | 6.1% |
| Median Negative | -1.7% | -3.6% | -2.2% |
| Max Positive | 6.1% | 8.8% | 17.6% |
| Max Negative | -9.8% | -13.4% | -8.8% |
| Forward Returns | |||
|---|---|---|---|
| Earnings Date | 1D Returns | 5D Returns | 21D Returns |
| 8/4/2026 | 0.2% | 2.5% | |
| 4/30/2026 | -1.6% | 2.4% | 7.0% |
| 2/3/2026 | 2.2% | 3.8% | 6.1% |
| 10/30/2025 | -0.3% | -2.5% | 17.6% |
| 7/29/2025 | -1.7% | -5.0% | 1.1% |
| 4/24/2025 | 1.4% | 8.2% | -1.1% |
| 2/4/2025 | -9.1% | -13.4% | -6.6% |
| 10/31/2024 | -2.4% | -3.9% | -3.0% |
| 7/30/2024 | -9.8% | -12.1% | -8.8% |
| 4/25/2024 | 2.9% | 1.4% | 3.2% |
| 2/1/2024 | 4.6% | 5.5% | 5.1% |
| 10/26/2023 | 1.9% | -0.8% | -1.7% |
| 8/1/2023 | -1.3% | -0.5% | 3.1% |
| 4/27/2023 | 1.5% | 4.2% | -1.0% |
| 2/2/2023 | -3.3% | -0.3% | -0.1% |
| 10/27/2022 | 1.4% | 1.0% | 9.2% |
| 7/28/2022 | -1.4% | -4.0% | -1.1% |
| 4/28/2022 | 4.9% | 4.9% | 9.4% |
| 2/3/2022 | -3.7% | -6.7% | -5.1% |
| 10/28/2021 | 6.1% | 8.8% | -2.9% |
| 7/29/2021 | -1.8% | -3.6% | -2.2% |
| 4/29/2021 | -4.4% | 0.8% | -1.5% |
| 2/4/2021 | -1.7% | -3.1% | -5.4% |
| 10/27/2020 | -1.1% | -2.7% | 1.6% |
| 7/31/2020 | 1.6% | 2.6% | 8.4% |
| SUMMARY STATS | |||
| # Positive | 11 | 12 | 11 |
| # Negative | 14 | 13 | 13 |
| Median Positive | 1.9% | 3.2% | 6.1% |
| Median Negative | -1.7% | -3.6% | -2.2% |
| Max Positive | 6.1% | 8.8% | 17.6% |
| Max Negative | -9.8% | -13.4% | -8.8% |
SEC Filings
Expand for More| Report Date | Filing Date | Filing |
|---|---|---|
| 06/30/2026 | 08/07/2026 | 10-Q |
| 03/31/2026 | 05/04/2026 | 10-Q |
| 12/31/2025 | 02/24/2026 | 10-K |
| 09/30/2025 | 11/05/2025 | 10-Q |
| 06/30/2025 | 08/05/2025 | 10-Q |
| 03/31/2025 | 05/02/2025 | 10-Q |
| 12/31/2024 | 02/25/2025 | 10-K |
| 09/30/2024 | 11/06/2024 | 10-Q |
| 06/30/2024 | 08/05/2024 | 10-Q |
| 03/31/2024 | 05/03/2024 | 10-Q |
| 12/31/2023 | 02/26/2024 | 10-K |
| 09/30/2023 | 11/03/2023 | 10-Q |
| 06/30/2023 | 08/07/2023 | 10-Q |
| 03/31/2023 | 05/05/2023 | 10-Q |
| 12/31/2022 | 02/24/2023 | 10-K |
| 09/30/2022 | 11/03/2022 | 10-Q |
| Report Date | Filing Date | Filing |
|---|---|---|
| 06/30/2026 | 08/07/2026 | 10-Q |
| 03/31/2026 | 05/04/2026 | 10-Q |
| 12/31/2025 | 02/24/2026 | 10-K |
| 09/30/2025 | 11/05/2025 | 10-Q |
| 06/30/2025 | 08/05/2025 | 10-Q |
| 03/31/2025 | 05/02/2025 | 10-Q |
| 12/31/2024 | 02/25/2025 | 10-K |
| 09/30/2024 | 11/06/2024 | 10-Q |
| 06/30/2024 | 08/05/2024 | 10-Q |
| 03/31/2024 | 05/03/2024 | 10-Q |
| 12/31/2023 | 02/26/2024 | 10-K |
| 09/30/2023 | 11/03/2023 | 10-Q |
| 06/30/2023 | 08/07/2023 | 10-Q |
| 03/31/2023 | 05/05/2023 | 10-Q |
| 12/31/2022 | 02/24/2023 | 10-K |
| 09/30/2022 | 11/03/2022 | 10-Q |
| 06/30/2022 | 08/05/2022 | 10-Q |
| 03/31/2022 | 05/05/2022 | 10-Q |
| 12/31/2021 | 02/25/2022 | 10-K |
| 09/30/2021 | 11/05/2021 | 10-Q |
| 06/30/2021 | 08/09/2021 | 10-Q |
| 03/31/2021 | 05/05/2021 | 10-Q |
| 12/31/2020 | 02/25/2021 | 10-K |
| 09/30/2020 | 11/05/2020 | 10-Q |
| 06/30/2020 | 08/05/2020 | 10-Q |
| 03/31/2020 | 05/06/2020 | 10-Q |
| 12/31/2019 | 02/26/2020 | 10-K |
| 09/30/2019 | 11/05/2019 | 10-Q |
Recent Forward Guidance
Updated 8/5/2026Latest: Q2 2026 Earnings Reported 8/4/2026
| Forward Guidance | Guidance Change | ||||||
|---|---|---|---|---|---|---|---|
| Metric | Low | Mid | High | % Chg | % Delta | Change | Prior |
| 2026 Revenue | 66.30 Bil | 66.80 Bil | 67.30 Bil | 0.6% | Raised | Guidance: 66.40 Bil for 2026 | |
| 2026 Non-GAAP Gross Margin | 81.0% | -1.0% | Lowered | Guidance: 82.0% for 2026 | |||
| 2026 Non-GAAP Operating Expenses | 42.00 Bil | 42.35 Bil | 42.70 Bil | 16.3% | Raised | Guidance: 36.40 Bil for 2026 | |
| 2026 Non-GAAP Other (income) expense, net | -1.40 Bil | ||||||
| 2026 Non-GAAP Effective income tax rate | 35.0% | 35.5% | 36.0% | 11.5% | Raised | Guidance: 24.0% for 2026 | |
| 2026 Non-GAAP EPS | 2.66 | 2.71 | 2.76 | -46.9% | Lowered | Guidance: 5.1 for 2026 | |
Prior: Q1 2026 Earnings Reported 4/30/2026
| Forward Guidance | Guidance Change | ||||||
|---|---|---|---|---|---|---|---|
| Metric | Low | Mid | High | % Chg | % Delta | Change | Prior |
| 2026 Sales | 65.80 Bil | 66.40 Bil | 67.00 Bil | 0.2% | Raised | Guidance: 66.25 Bil for 2026 | |
| 2026 Non-GAAP Gross margin | 82.0% | 0 | Affirmed | Guidance: 82.0% for 2026 | |||
| 2026 Non-GAAP Operating expenses | 36.00 Bil | 36.40 Bil | 36.80 Bil | 0 | Affirmed | Guidance: 36.40 Bil for 2026 | |
| 2026 Non-GAAP Effective income tax rate | 23.5% | 24.0% | 24.5% | 0 | Affirmed | Guidance: 24.0% for 2026 | |
| 2026 Non-GAAP EPS | 5.04 | 5.1 | 5.16 | 0.5% | Raised | Guidance: 5.08 for 2026 | |
Q4 2025 Earnings Reported 2/3/2026
| Forward Guidance | Guidance Change | ||||||
|---|---|---|---|---|---|---|---|
| Metric | Low | Mid | High | % Chg | % Delta | Change | Prior |
| 2026 Revenue | 65.50 Bil | 66.25 Bil | 67.00 Bil | 2.3% | Higher New | Guidance: 64.75 Bil for 2025 | |
| 2026 Non-GAAP Gross Margin | 82.0% | ||||||
| 2026 Non-GAAP Operating Expenses | 35.90 Bil | 36.40 Bil | 36.90 Bil | 39.2% | Higher New | Guidance: 26.15 Bil for 2025 | |
| 2026 Non-GAAP Effective Tax Rate | 23.5% | 24.0% | 24.5% | 9.5% | Higher New | Guidance: 14.5% for 2025 | |
| 2026 EPS | 5 | 5.08 | 5.15 | -43.3% | Lower New | Guidance: 8.96 for 2025 | |
Q3 2025 Earnings Reported 10/30/2025
| Forward Guidance | Guidance Change | ||||||
|---|---|---|---|---|---|---|---|
| Metric | Low | Mid | High | % Chg | % Delta | Change | Prior |
| 2025 Revenue | 64.50 Bil | 64.75 Bil | 65.00 Bil | -0.1% | Lowered | Guidance: 64.80 Bil for 2025 | |
| 2025 Non-GAAP EPS | 8.93 | 8.96 | 8.98 | 0.4% | Raised | Guidance: 8.92 for 2025 | |
| 2025 Non-GAAP Operating Expenses | 25.90 Bil | 26.15 Bil | 26.40 Bil | 0.6% | Raised | Guidance: 26.00 Bil for 2025 | |
| 2025 Non-GAAP Effective Tax Rate | 14.0% | 14.5% | 15.0% | -1.0% | Lowered | Guidance: 15.5% for 2025 | |
Insider Activity
Updated 8/10/2026| # | Owner | Title | Holding | Action | Filing Date | Price | Shares | Transacted Value | Value of Held Shares | Form |
|---|---|---|---|---|---|---|---|---|---|---|
| 1 | Deluca, Richard R | EVP&Pres, Merck Animal Heallth | Direct | Sell | 8102026 | 130.38 | 6,050 | 788,773 | 20,271,727 | Form |
| 2 | Guindo, Chirfi | EVP, Access, Policy & Comms | Direct | Sell | 8072026 | 131.00 | 15,000 | 1,965,000 | 6,106,320 | Form |
| 3 | Maraldo, David R | EVP & Pres. MMD | Direct | Sell | 8072026 | 128.72 | 18,706 | 2,407,797 | 2,344,266 | Form |
| 4 | Williams, David Michael | EVP,Chief Info&Digital Officer | Direct | Sell | 8072026 | 128.77 | 52,847 | 6,805,145 | 4,084,096 | Form |
| 5 | Guindo, Chirfi | Chief Marketing Officer | Direct | Sell | 2122026 | 121.46 | 10,000 | 1,214,562 | 7,362,083 | Form |
| # | Owner | Title | Holding | Action | Filing Date | Price | Shares | Transacted Value | Value of Held Shares | Form |
|---|---|---|---|---|---|---|---|---|---|---|
| 1 | Deluca, Richard R | EVP&Pres, Merck Animal Heallth | Direct | Sell | 8102026 | 130.38 | 6,050 | 788,773 | 20,271,727 | Form |
| 2 | Guindo, Chirfi | EVP, Access, Policy & Comms | Direct | Sell | 8072026 | 131.00 | 15,000 | 1,965,000 | 6,106,320 | Form |
| 3 | Maraldo, David R | EVP & Pres. MMD | Direct | Sell | 8072026 | 128.72 | 18,706 | 2,407,797 | 2,344,266 | Form |
| 4 | Williams, David Michael | EVP,Chief Info&Digital Officer | Direct | Sell | 8072026 | 128.77 | 52,847 | 6,805,145 | 4,084,096 | Form |
| 5 | Guindo, Chirfi | Chief Marketing Officer | Direct | Sell | 2122026 | 121.46 | 10,000 | 1,214,562 | 7,362,083 | Form |
| 6 | Guindo, Chirfi | Chief Marketing Officer | Direct | Sell | 2092026 | 118.41 | 10,000 | 1,184,101 | 8,361,544 | Form |
| 7 | Zachary, Jennifer | EVP, General Counsel | Direct | Sell | 2092026 | 119.15 | 121,573 | 14,485,690 | 8,211,454 | Form |
| 8 | Williams, David Michael | EVP,Chief Info&Digital Officer | Direct | Sell | 2062026 | 121.91 | 5,000 | 609,525 | 3,759,275 | Form |
| 9 | Oosthuizen, Johannes Jacobus | President, U.S. Market | Direct | Sell | 2062026 | 121.87 | 15,000 | 1,827,992 | 2,583,243 | Form |
| 10 | Deluca, Richard R | EVP&Pres, Merck Animal Heallth | Direct | Sell | 2062026 | 120.92 | 37,685 | 4,557,025 | 19,368,877 | Form |
| 11 | Guindo, Chirfi | Chief Marketing Officer | Direct | Sell | 2062026 | 121.88 | 20,000 | 2,437,676 | 9,825,678 | Form |
| 12 | Smart, Dalton E Iii | SVP Fin. - Global Controller | Direct | Sell | 2062026 | 119.67 | 6,400 | 765,920 | 981,911 | Form |
| 13 | Litchfield, Caroline | EVP & CFO | Direct | Sell | 2062026 | 119.61 | 41,997 | 5,023,312 | 10,787,997 | Form |
| 14 | Li, Dean Y | Executive VP & President, MRL | Direct | Sell | 2062026 | 118.77 | 15,087 | 1,791,824 | 12,146,215 | Form |
| 15 | Davis, Robert M | Chairman, CEO & President | Direct | Sell | 2062026 | 118.04 | 47,434 | 5,599,327 | 52,364,789 | Form |
| 16 | Downing, Cristal N | Chief Comm. & Public Afrs Ofcr | Direct | Sell | 11122025 | 87.00 | 7,085 | Form | ||
| 17 | Williams, David Michael | EVP,Chief Info&Digital Officer | Direct | Sell | 11042025 | 83.59 | 8,614 | 720,040 | 2,054,465 | Form |
Investor Activity (13F)
Updated Aug 12, 2026Active managers (13F portfolio over $250M, at least 3 holdings) with a position over $5M that is either over 10% of their portfolio or held in a concentrated book of 50 or fewer total positions. Index/ETF, sovereign, bank, community-bank and charitable/donor-advised filers are excluded.
| Active Manager | Value | % of Portfolio | Total Positions | QoQ | Filing |
|---|---|---|---|---|---|
| Atle Fund Management AB | $22.9 Mil | 7.4% | 39 | TRIM -82.7% | 13F |
| Sector Gamma AS | $31.3 Mil | 7.4% | 42 | TRIM -28.4% | 13F |
| Smead Capital Management, Inc. | $297.3 Mil | 6.5% | 32 | TRIM -12.9% | 13F |
| Kahn Brothers Group Inc | $27.3 Mil | 4.8% | 48 | TRIM -47.2% | 13F |
| SRB Corp | $55.7 Mil | 3.4% | 44 | Hold | 13F |
| Eldred Rock Partners, LLC | $13.1 Mil | 3.3% | 31 | Hold | 13F |
| Patient Square Capital LP | $9.6 Mil | 1.7% | 29 | New | 13F |
| Martin Investment Management, LLC | $5.7 Mil | 1.7% | 46 | Hold | 13F |
| Central Securities Corp | $18.0 Mil | 1.5% | 30 | Hold | 13F |
| Artia Global Partners LP | $5.6 Mil | 1.3% | 48 | New | 13F |
| Fairfax Financial Holdings LTD/ Can | $20.8 Mil | 1.1% | 29 | Hold | 13F |
| Blackhill Capital Inc | $20.3 Mil | 1.0% | 49 | Hold | 13F |
| Semper Augustus Investments Group LLC | $5.4 Mil | 0.6% | 44 | Hold | 13F |
| Active Manager | Value | % of Portfolio | Total Positions | QoQ | As Of | Filing |
|---|---|---|---|---|---|---|
| FengHe Fund Management Pte. Ltd. | $44.3 Mil | 2.5% | 38 | Exited | Dec 31, 2025 | 13F |
| Atle Fund Management AB | $22.9 Mil | 7.4% | 39 | TRIM -82.7% | Mar 31, 2026 | 13F |
| Kahn Brothers Group Inc | $27.3 Mil | 4.8% | 48 | TRIM -47.2% | Mar 31, 2026 | 13F |
| Sector Gamma AS | $31.3 Mil | 7.4% | 42 | TRIM -28.4% | Mar 31, 2026 | 13F |
| Smead Capital Management, Inc. | $297.3 Mil | 6.5% | 32 | TRIM -12.9% | Mar 31, 2026 | 13F |
| Active Manager | Value | % of Portfolio | Total Positions | QoQ | Filing |
|---|---|---|---|---|---|
| Smead Capital Management, Inc. | $297.3 Mil | 6.5% | 32 | TRIM -12.9% | 13F |
| SRB Corp | $55.7 Mil | 3.4% | 44 | Hold | 13F |
| Sector Gamma AS | $31.3 Mil | 7.4% | 42 | TRIM -28.4% | 13F |
| Kahn Brothers Group Inc | $27.3 Mil | 4.8% | 48 | TRIM -47.2% | 13F |
| Atle Fund Management AB | $22.9 Mil | 7.4% | 39 | TRIM -82.7% | 13F |
| Fairfax Financial Holdings LTD/ Can | $20.8 Mil | 1.1% | 29 | Hold | 13F |
| Blackhill Capital Inc | $20.3 Mil | 1.0% | 49 | Hold | 13F |
| Central Securities Corp | $18.0 Mil | 1.5% | 30 | Hold | 13F |
| Eldred Rock Partners, LLC | $13.1 Mil | 3.3% | 31 | Hold | 13F |
| Patient Square Capital LP | $9.6 Mil | 1.7% | 29 | New | 13F |
| Martin Investment Management, LLC | $5.7 Mil | 1.7% | 46 | Hold | 13F |
| Artia Global Partners LP | $5.6 Mil | 1.3% | 48 | New | 13F |
| Semper Augustus Investments Group LLC | $5.4 Mil | 0.6% | 44 | Hold | 13F |
MRK Trade Sentinel
Constructive
CONVICTION RATIONALE
Merck is executing a necessary, high-stakes transition away from its maturing blockbuster, Keytruda. Early commercial success from new launches and a pipeline targeting a $70 billion opportunity provide a credible path to offset future declines. This potential justifies the significant near-term investment and its pressure on reported earnings.
STOCK ARCHETYPE
Patent-Protected Franchise(Volume of Prescriptions for Key Patented Drugs × Net Realized Price per Prescription) + Alliance Revenue Successful commercialization of new, high-margin specialty drugs and label expansions for Keytruda, which must overcome significant R&D expenses from acquisitions and pricing pressures from payers and governments.
INVESTMENT THESIS
Evidence suggests a credible, funded path exists, with strong early uptake from new products providing initial validation.
- Winrevair sales reached $588 million in Q2 2026, growing 75% excluding foreign exchange.
- The new subcutaneous Keytruda Qlex formulation achieved $463 million in Q2 2026 sales.
- More than 1,800 new U.S. patients received a prescription for Winrevair in Q2 2026.
- Management is targeting over $70 billion in opportunity from more than 20 new products.
PRIMARY RISK
The strategy's high cost, reflected in a 46.9% cut to 2026 earnings guidance, may not yield sufficient returns if the acquired pipeline underperforms or new launches falter.
- Trailing-twelve-month operating margin fell to 10.5% from 31.2% a year earlier.
- Keytruda franchise sales growth moderated to 5% in Q2 from 8% in Q1 2026.
- Net debt increased to $46.8 billion from $26.8 billion year-over-year to fund acquisitions.
- Full-year 2026 non-GAAP EPS guidance was lowered by 46.9%.
| KPI | Status | Rationale |
|---|---|---|
| Keytruda Franchise Sales Growth | 5% year-over-year growth to $8.4 billion in the second quarter of 2026 - Decelerating | Management commentary from the August 2026 earnings call confirms this trend, stating that U.S. Keytruda growth is expected to moderate as it reaches peak penetration in several key indications. Growth is being driven by uptake in earlier-stage cancers and new combinations. |
| New Product Launch Performance (Winrevair) | $588 million in global sales for Winrevair in Q2 2026, a 75% year-over-year increase excluding foreign exchange. - Accelerating | According to the Q2 2026 earnings call, growth is driven by strong demand from adults with pulmonary arterial hypertension, with over 1,800 new patients in the U.S. receiving a prescription during the quarter. |
| WINREVAIR New Patient Prescriptions (U.S.) | more than 1,800 (Q2 2026) | This signals the initial market uptake and adoption rate for Winrevair, a key new product launch in the pulmonary arterial hypertension market. |
| KEYTRUDA QLEX Sales | $463 million (Q2 2026) | This measures the commercial adoption of the new subcutaneous formulation of Keytruda, a key part of the company's strategy to defend the franchise. |
Can new product momentum offset Keytruda's maturation?
BULL VIEW
Strong Winrevair uptake, with $588 million in Q2 sales, and a $70 billion pipeline opportunity show the pivot is working and will create a new, diversified growth engine before the 2028 patent cliff.
CORE TENSION
Can Winrevair's 75% growth and the new pipeline offset the moderation in Keytruda's growth, a tension which prompted a neutral market reaction to the last earnings report?
PREVAILING SENTIMENT
Early evidence favors the bulls. Winrevair's commercial ramp is strong, and multiple key clinical readouts are scheduled for the second half of 2026, providing near-term catalysts.
BEAR VIEW
Keytruda's slowing growth, down to 5% in Q2, is happening too fast, and new products are too small to fill a gap left by a drug that constituted 49% of 2025 sales.
| Timeline | Event & Metric To Watch |
|---|---|
September 21, 2026 - October 10, 2026 | Near-Term Regulatory Setbacks Watch: FDA press releases or company announcements regarding Complete Response Letters (CRLs) or restrictive labels for these candidates. |
September 21, 2026 | Winrevair Label Update Decision Watch: FDA target action date for Winrevair supplemental label update based on the Phase 3 HYPERION trial. |
October 4, 2026 | Welireg Combo FDA Decision Watch: FDA target action date for Welireg in combination with Lenvima for advanced Renal Cell Carcinoma. |
October 10, 2026 | Ifinatamab Deruxtecan PDUFA Date Watch: FDA target action date for ifinatamab deruxtecan (MK-3000) for previously treated extensive-stage small cell lung cancer. |
10/13/2026 | Johnson & Johnson Earnings Watch: Peer Johnson & Johnson (JNJ) is scheduled to report earnings. |
10/29/2026 | Q3 Earnings Headwinds Watch: Keytruda and Ohtuvayre sales figures versus consensus; any downward revision to full-year guidance. |
11/2/2026 | Pfizer Earnings Report Watch: Peer Pfizer (PFE) is scheduled to report earnings. |
second half of 2026 | Key Pipeline Readout Failure Watch: Top-line results from the ATLAS-UC, BRUNELLO, and TroFuse-005 trials. Any delay or negative outcome. |
second half of the year | Tulisokibart Ulcerative Colitis Data Watch: Data readout from the Phase 3 ATLAS-UC induction and maintenance study for tulisokibart. |
second half of the year | Tulisokibart HS Data Watch: Data readout from the Phase 2 study of tulisokibart in hidradenitis suppurativa. |
| Date | Event | Stock Impact |
|---|---|---|
2026-08-10 | Acquisition of Terns Pharmaceuticals Details: Merck acquired Terns Pharmaceuticals in May 2026 for $6.8 billion, recording a charge of $5.7 billion to R&D expenses for acquired in-process research and development. | +1.8% $128.58 -> $130.92 |
2026-08-04 | Q2 Earnings and Guidance Update Details: For 2026, the company raised revenue guidance by 0.6% but lowered Non-GAAP EPS guidance by 46.9% to a new midpoint of $2.71, citing acquisition-related charges. | +0.4% $127.77 -> $128.33 |
2026-08-04 | FDA Approves LIPFENDRA Details: The FDA approved LIPFENDRA, the first and only oral PCSK9 inhibitor, to help reduce LDL cholesterol in adults with hypercholesterolemia. | +0.4% $127.77 -> $128.33 |
2026-06-22 | Positive Tulisokibart Phase 3 Data Details: Merck announced positive topline results from the Phase 3 ATLAS-UC induction-only study for tulisokibart in patients with moderately to severely active ulcerative colitis. | +5.0% $113.87 -> $119.60 |
2026-04-21 | FDA Approves IDVYNSO Details: The FDA approved IDVYNSO, a new, two-drug single-tablet regimen of 100 mg doravirine and 0.25 mg islatravir, for the treatment of HIV-1 infection in adults. | -3.6% $116.26 -> $112.08 |
2026-03-18 | Bravecto Quantum Label Expansion Details: The FDA approved an expanded label for BRAVECTO QUANTUM to treat and control Asian Longhorned Tick and Gulf Coast Tick for 12 months in dogs. | -1.4% $115.04 -> $113.38 |
2026-02-03 | Positive Post-Earnings Stock Reaction Details: The stock had a two-day reaction of 4.0% around the earnings call, indicating a positive market reception to the results and outlook provided at the time. | +4.4% $111.73 -> $116.62 |
Position Sizing
4% - 6%
NORMAL POSITION
Sizing is volatility-based: MRK trades at roughly 26% annualized options-implied volatility versus about 13% for the S&P 500 (2.1x the market), around the 27th percentile of its own trailing year. A 4% - 6% position keeps a single-name swing of that size within a diversified portfolio's risk budget.
Diversification Alternatives
JNJ - Johnson & Johnson
Diversified Pharma LeaderOffers greater revenue scale, at 1.5 times Merck's, and a more stable operating margin at 26.8%, providing less exposure to a single-product patent cliff.
LLY - Eli Lilly
High-Growth CompetitorDelivers substantially higher growth, with 49.6% TTM revenue growth, and superior operating margins at 49.7%, representing a more aggressive, high-momentum play in the pharma space.
Merck is a pharmaceutical giant leveraging its Keytruda cash cow to fund a massive, high-stakes pivot to a new portfolio before its blockbuster drug faces a patent cliff and escalating price controls.
Merck's financial performance is currently dominated by its cancer drug Keytruda, which comprised 49% of 2025 sales. Management is acutely aware of the upcoming patent expiration (2028-2029) and is aggressively using its cash flow to acquire and develop a new wave of drugs across oncology, cardiometabolic, and immunology. The core investment thesis hinges on whether these new assets, representing a stated $70 billion commercial opportunity, can scale quickly enough to offset the inevitable decline of Keytruda and other maturing products facing generic competition.
Positive Phase 3 data readouts for key pipeline assets like tulisokibart or sac-TMT, faster-than-expected commercial uptake of new launches like Winrevair and Lipfendra, and successful integration of recent large acquisitions.
Clinical trial failures for late-stage pipeline candidates, slower-than-expected commercial launches, or an earlier-than-expected successful biosimilar challenge to Keytruda's patents.
Quarterly fluctuations in wholesaler inventory, which management noted can impact reported sales growth for products like Keytruda.
Repricing Catalyst
Upcoming data readouts in the second half of 2026 for key pipeline assets, including tulisokibart in immunology and MK-3000 in ophthalmology, as mentioned in the Q2 earnings call.
Pharmaceutical
$59.6B TTM (89% of Total)What It Is
Sells human health pharmaceutical and vaccine products, including therapeutic and preventive agents for human disorders, to drug wholesalers, retailers, hospitals, government agencies, and managed health care providers.
Who Pays & How
Wholesalers, distributors, government agencies, and managed care organizations write the checks to access a portfolio of innovative and often life-saving medicines and vaccines for the populations they serve.
Competition
Animal Health
$6.7B TTM (10% of Total)What It Is
Sells veterinary pharmaceuticals, vaccines, and health management solutions for livestock and companion animals to veterinarians, distributors, animal producers, farmers, and pet owners.
Who Pays & How
Veterinarians, distributors, and animal producers pay for products that prevent, treat, and control diseases in livestock and companion animals, ensuring animal health and productivity.
Competition
Merck — Investor Video Playlist
Industry Resources
| Health Care Resources |
| U.S. National Library of Medicine |
| ClinicalTrials.gov |
| Modern Healthcare |
| Healthcare Dive |
| Fierce Healthcare |
| Health Affairs |
| Health Data Management |
| FDA Tracker |
| Pharmaceuticals Resources |
| Fierce Pharma |
| Pharm Exec |
| Endpoints News |
External Quote Links
| Y Finance | Barrons |
| TradingView | Morningstar |
| SeekingAlpha | ValueLine |
| Motley Fool | Robinhood |
| CNBC | Etrade |
| MarketWatch | Unusual Whales |
| YCharts | Perplexity Finance |
| FinViz |
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