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Merck & Company
(NYSE:MRK)
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Rating:60Neutral
Price Target:
$149.00
▼(-4.76% Downside)
Action:Reiterated
Date:10/14/26
MRK scores moderately due to strong free-cash-flow generation and a generally positive earnings-call outlook (raised/narrowed revenue guidance and multiple product/pipeline catalysts), offset by a notable TTM profitability drop with higher leverage, weak near-term technical momentum, and a very elevated P/E despite a modest dividend yield.
Positive Factors
Cash Generation
Robust and improving free cash flow gives Merck internally generated funds to support dividends, repurchases, debt service, and pipeline investment. Healthy cash conversion provides resilience when reported earnings fluctuate and strengthens the company’s ability to sustain strategic spending.
Negative Factors
Profitability Decline
The sharp TTM profitability decline reduces earnings predictability and weakens returns on the company’s substantial capital base. If lower margins persist, Merck may have less flexibility to absorb development costs, fund acquisitions, or offset pressure from product-cycle changes.
Read all positive and negative factors
Positive Factors
Negative Factors
Cash Generation
Robust and improving free cash flow gives Merck internally generated funds to support dividends, repurchases, debt service, and pipeline investment. Healthy cash conversion provides resilience when reported earnings fluctuate and strengthens the company’s ability to sustain strategic spending.
Read all positive factors
Merck & Company Key Performance Indicators (KPIs)
Any
Operating Expense Breakdown
Details core costs like R&D, marketing, and admin, offering insight into how efficiently the company runs and where it’s prioritizing investment.
Details core costs like R&D, marketing, and admin, offering insight into how efficiently the company runs and where it’s prioritizing investment.
Data provided by:
The Fly
The FlyMerck & Company (MRK) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$358.41B
Dividend Yield2.34%
Average Volume (3M)10.18M
Price to Earnings (P/E)115.3
Beta (1Y)0.27
Revenue Growth4.51%
EPS Growth-80.62%
CountryUS
Employees74,000
SectorHealthcare
Sector Strength45
IndustryDrug Manufacturers - General
Share Statistics
EPS (TTM)1.26
Shares Outstanding2,467,171,600
10 Day Avg. Volume10,899,094
30 Day Avg. Volume10,180,229
Financial Highlights & Ratios
PEG Ratio1.81
Price to Book (P/B)5.01
Price to Sales (P/S)4.06
P/FCF Ratio21.31
Enterprise Value/Market Cap1.02
Enterprise Value/Revenue5.48
Enterprise Value/Gross Profit7.28
Enterprise Value/Ebitda26.15
Forecast
1Y Price Target
$159.76Price Target Upside2.12% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering21
EPS Forecast (FY)2.64
Revenue Forecast (FY)$67.05B
Merck & Company Business Overview & Revenue Model
Company Description
Merck & Co., Inc. is a global healthcare leader with operations spanning two core divisions: Pharmaceuticals and Animal Health. The Pharmaceutical segment is dedicated to human health, offering a broad spectrum of medicinal products. These cover c...
How the Company Makes Money
Merck makes money primarily by selling patented and branded biopharmaceutical products and vaccines to wholesalers, retailers, hospitals, governments, and other healthcare providers worldwide, with pricing and demand influenced by reimbursement, t...
Merck & Company Earnings Call Summary
Earnings Call Date:Aug 04, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Oct 29, 2026
Earnings Call Sentiment Positive
The call presented a largely positive commercial and scientific story: core revenue growth (Q2 +5%), several strong product performances (KEYTRUDA, WELIREG, WINREVAIR), meaningful vaccine and pneumococcal momentum, multiple important regulatory approvals and positive Phase III readouts (LIPFENDRA approval, sac-TMT, tulisokibart induction, islatravir combos), and raised/narrowed revenue guidance. Offsetting these positives are material one-time charges from the Terns acquisition that produced a GAAP loss and drove a volatile tax rate, margin and expense pressure, one clinical setback (SSc-ILD), and some near-term commercial headwinds (OHTUVAYRE unwind, moderating KEYTRUDA U.S. growth). Overall, management emphasized pipeline derisking, continued launches, and long-term opportunity, while acknowledging short-term impacts from the acquisition and inventory/reserve dynamics.Positive Updates
Revenue Growth and Raised Guidance
Q2 total revenue of $16.6 billion, up 5% (4% ex-FX). Company raised and narrowed 2026 non-GAAP revenue guidance to $66.3B–$67.3B, representing growth of 2%–4% (including ~1 ppt FX tailwind).
Negative Updates
Large One-Time Acquisition Charge and GAAP Loss
Q2 included a $5.7 billion charge related to the acquisition of Terns Pharmaceuticals (guided ~$5.8B upfront), producing a GAAP loss per share of $0.13 and an onetime charge of $2.31 per share embedded in results and full-year guidance.
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Q2-2026 Updates
Positive
Negative
Revenue Growth and Raised Guidance
Q2 total revenue of $16.6 billion, up 5% (4% ex-FX). Company raised and narrowed 2026 non-GAAP revenue guidance to $66.3B–$67.3B, representing growth of 2%–4% (including ~1 ppt FX tailwind).
Read all positive updates
Company Guidance
Merck raised and narrowed its 2026 non‑GAAP guidance to $66.3–$67.3 billion in revenue (growth 2–4%, ~+1 ppt FX at mid‑July), gross margin ~81%, operating expenses $42.0–$42.7 billion (including ~$5.8 billion upfront Terns charge and MK‑4208 investment), other expense ≈$1.4 billion, and a tax rate of 35–36%; the company assumes ~2.48 billion shares outstanding and expects EPS of $2.66–$2.76 (midpoint $2.71), which includes ~+$0.15 FX benefit, a $2.31 per‑share one‑time Terns charge and ~ $0.12 per‑share ongoing MK‑4208/financing costs. Management noted Q2 revenue of $16.6 billion (up 5% / 4% ex‑FX), a Q2 loss of $0.13 per share reflecting the Terns charge, a pace of ~ $3 billion in share repurchases for 2026, and that H2 other revenue should be significantly higher due to hedging and an expected Q4 milestone, while flagging a Q3 unwind impact for OHTUVAYRE and moderating U.S. KEYTRUDA growth (no repeat of ~ $250 million wholesaler timing benefit).Merck & Company Financial Statement Overview
Summary
Income Statement
62
Positive
Balance Sheet
58
Neutral
Cash Flow
74
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 66.40B | 64.93B | 64.17B | 60.12B | 59.28B | 48.70B |
| Gross Profit | 50.05B | 46.73B | 48.98B | 43.99B | 41.87B | 35.08B |
| EBITDA | 13.93B | 28.26B | 25.71B | 6.91B | 21.32B | 17.90B |
| Net Income | 3.17B | 18.25B | 17.12B | 365.00M | 14.52B | 13.05B |
Balance Sheet | ||||||
| Total Assets | 129.80B | 136.87B | 117.11B | 106.67B | 109.16B | 105.69B |
| Cash, Cash Equivalents and Short-Term Investments | 7.14B | 14.56B | 13.69B | 7.09B | 13.19B | 8.10B |
| Total Debt | 53.91B | 50.53B | 38.27B | 36.27B | 31.98B | 34.63B |
| Total Liabilities | 87.82B | 84.20B | 70.73B | 69.04B | 63.10B | 67.44B |
| Stockholders Equity | 41.93B | 52.61B | 46.31B | 37.58B | 45.99B | 38.18B |
Cash Flow | ||||||
| Free Cash Flow | 16.06B | 12.36B | 18.10B | 9.14B | 14.71B | 9.66B |
| Operating Cash Flow | 19.97B | 16.47B | 21.47B | 13.01B | 19.09B | 14.11B |
| Investing Cash Flow | -27.30B | -13.74B | -7.73B | -14.08B | -4.96B | -16.55B |
| Financing Cash Flow | 6.17B | -1.92B | -7.03B | -4.81B | -9.12B | 2.59B |
Merck & Company Technical Analysis
Neutral
156.45
Price Trends
146.28
Negative
135.23
Positive
124.61
Positive
Market Momentum
0.53
Negative
49.64
Neutral
50.92
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MRK, the sentiment is Neutral. The current price of 156.45 is above the 20-day moving average (MA) of 145.19, above the 50-day MA of 146.28, and above the 200-day MA of 124.61, indicating a neutral trend. The MACD of 0.53 indicates Negative momentum. The RSI at 49.64 is Neutral, neither overbought nor oversold. The STOCH value of 50.92 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for MRK.
Merck & Company Risk Analysis
Merck & Company disclosed 31 risk factors in its most recent earnings report. Merck & Company reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Merck & Company Peers Comparison
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $125.59B | 13.54 | 46.75% | 4.10% | 3.13% | 83.17% | |
68 Neutral | $635.07B | 40.00 | 19.55% | 2.00% | 7.81% | -35.95% | |
67 Neutral | $283.99B | 23.54 | 29.64% | 3.14% | 2.33% | -4.08% | |
66 Neutral | $171.16B | 39.68 | 4.89% | 5.73% | -0.21% | -59.71% | |
65 Neutral | $504.76B | 80.47 | -136.50% | 2.42% | 10.39% | 68.16% | |
60 Neutral | $358.41B | 115.29 | 6.60% | 2.34% | 4.51% | -80.62% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% |
* Healthcare Sector Average
MRK
Merck & Company
145.27
59.78
69.93%
BMY
Bristol-Myers Squibb
61.48
19.94
48.00%
JNJ
Johnson & Johnson
263.81
77.71
41.75%
NVS
Novartis
151.12
24.46
19.31%
PFE
Pfizer
30.03
6.88
29.74%
ABBV
AbbVie
285.64
64.24
29.01%
Merck & Company Corporate Events
Business Operations and StrategyExecutive/Board Changes
Merck appoints Paul Diaz to its board of directors
Positive
Oct 13, 2026
On Oct. 13, 2026, Merck Co., Inc. announced that Paul J. Diaz, managing partner at private investment firm Cressey Company, was elected to its Board of Directors effective Nov. 1, 2026, expanding the board to 14 members. Diaz is slated to stand ...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.