Merck & Co., Inc. (MRK) | Investment Case

1. Company Snapshot

1.a. Company Description

Merck & Co., Inc.operates as a healthcare company worldwide.It operates through two segments, Pharmaceutical and Animal Health.

The Pharmaceutical segment offers human health pharmaceutical products in the areas of oncology, hospital acute care, immunology, neuroscience, virology, cardiovascular, and diabetes, as well as vaccine products, such as preventive pediatric, adolescent, and adult vaccines.The Animal Health segment discovers, develops, manufactures, and markets veterinary pharmaceuticals, vaccines, and health management solutions and services, as well as digitally connected identification, traceability, and monitoring products.It serves drug wholesalers and retailers, hospitals, and government agencies; managed health care providers, such as health maintenance organizations, pharmacy benefit managers, and other institutions; and physicians and physician distributors, veterinarians, and animal producers.

The company has collaborations with AstraZeneca PLC; Bayer AG; Eisai Co., Ltd.; Ridgeback Biotherapeutics; and Gilead Sciences, Inc.to jointly develop and commercialize long-acting treatments in HIV.Merck & Co., Inc.

was founded in 1891 and is headquartered in Kenilworth, New Jersey.

Show Full description

1.b. Last Insights on MRK

Merck & Co., Inc.'s recent performance was driven by strong Q4 earnings, beating expectations, and robust demand for Keytruda. The company's new product launches and pipeline wins contributed to its growth, with a notable $9.2B Cidara deal. Additionally, institutional investors, such as Boston Research & Management Inc., increased their stakes in the company, indicating confidence in its prospects. Furthermore, analyst upgrades, including a recent upgrade from The Goldman Sachs Group, have also fueled the rally.

1.c. Company Highlights

Last Price	117.15
Change Percentage	-0.42%
Open	117.69
Previous Close	117.65
Market Cap ( Millions)	292615
Volume	11848702
Year High	122.66
Year Low	73.31
M A 50	106.7
M A 200	89.03

FCF Yield	3.60%
Dividend Yield	2.80%
ROE	36.31%
Debt / Equity	0.00%
Net Debt / EBIDTA	0.00%
Price To Book	5.62
Price Earnings Ratio	15.98
Price To FCF	27.77
Price To sales	4.5
EV / EBITDA	10.16

2. Merck's Strong Financial Performance and Growth Prospects

Merck reported total company revenues of $16.4 billion, a 5% increase, with oncology sales, driven by KEYTRUDA, rising 5% to $8.4 billion. The company's EPS was $2.04, beating estimates of $2.01. The gross margin assumption is approximately 82%, and operating expenses are expected to be between $35.9 billion and $36.9 billion. The company's guidance assumes revenue to be between $65.5 and $67 billion, representing growth of 1% to 3%.

Publication Date: Feb -04

                                    📋 Highlights
                                    Revenue Growth:
                                                Total revenues reached $16.4 billion in 2025, a 5% increase, driven by oncology and animal health segments.
Keytruda Performance:
                                                Keytruda family sales hit $8.4 billion, up 5%, with robust growth in earlier-stage cancers and metastatic indications.
Future Revenue Potential:
                                                Merck projects $70 billion in potential commercial opportunity by mid-2030s, exceeding consensus 2028 peak Keytruda revenue of $35 billion.
Acquisitions and Pipeline:
                                                Acquisitions of Verona and Sidera Therapeutics added $279 million Cefaxib sales and expanded RSV, HIV, and oncology pipelines.
Earnings Guidance:
                                                2026 revenue guidance of $65.5–$67 billion (+1–3% growth) and EPS of $5–$5.15, with $9 billion one-time Sidera acquisition charge impacting operating expenses.

                                

KEYTRUDA's Continued Growth and Pipeline Advancements

KEYTRUDA's sales increased 5% to $8.4 billion, driven by robust uptake in earlier-stage cancers and strong demand from metastatic indications. The company's pipeline is advancing, with notable progress in cardiometabolic and respiratory, vaccines, and oncology. The FDA approved KEYTRUDA and Keytruda Qlex in combination with PADCEP for adults with muscle-invasive bladder cancer who are ineligible for cisplatin-containing chemotherapy.

Valuation Metrics and Growth Prospects

The company's valuation metrics indicate a P/E Ratio of 15.21, P/B Ratio of 5.58, and ROE of 38.95%. With a broad and deep pipeline, Merck is poised for long-term growth. The company's confidence in its ability to achieve sustainable, strong sales growth is reflected in its guidance, and the $70 billion non-risk adjusted revenue opportunity by the mid-2030s suggests significant potential for growth. As Robert M. Davis stated, "we have confidence in our ability to achieve sustainable, strong sales growth in the decade ahead."

Future Milestones and Pipeline Potential

Merck has several key upcoming milestones, including the PDUFA date for KEYNOTE B96 and the presentation of top-line data from the phase three ISLEND one and two trials evaluating izlotrovir and lenacapavir. The company's pipeline advancements, including the potential for MK1406, a long-acting antiviral, and the acquisition of Verona Pharma and Sidera Therapeutics, are expected to drive long-term value for patients, customers, and shareholders.

3. NewsRoom

First Look: Novo sues Hims, BP halts buybacks, Meta faces trial

Feb -10

Source: gurufocus.com

Calla Lily Clinical Care and Merck Announce Strategic Collaboration to Advance Intravaginal Drug Delivery Platform

Feb -10

Source: businesswire.com

Merck: The Spike Doesn't Make It Overvalued

Feb -09

Source: seekingalpha.com

Merck: A Buy For 2026, But The Clock Is Still Ticking

Feb -09

Source: seekingalpha.com

Oppenheimer Asset Management Inc. Has $46.50 Million Holdings in Merck & Co., Inc. $MRK

Feb -09

Source: defenseworld.net

Merck & Co., Inc. $MRK Shares Acquired by Smartleaf Asset Management LLC

Feb -09

Source: defenseworld.net

Insider Selling: Merck & Co., Inc. (NYSE:MRK) EVP Sells $609,550.00 in Stock

Feb -09

Source: defenseworld.net

Merck & Co., Inc. (NYSE:MRK) SVP Sells $765,888.00 in Stock

Feb -09

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.59%)

6. Segments

Pharmaceutical

Expected Growth: 4.5%

Merck's pharmaceutical segment is driven by its robust pipeline, including cancer therapies such as Keytruda, and its vaccines business, which is expected to benefit from increased demand for HPV and other vaccines.

Animal Health

Expected Growth: 5.2%

Merck's Animal Health division growth is driven by increasing pet ownership, rising demand for livestock products, and advancements in animal health technologies.

Unallocated Other Revenues

Expected Growth: 6.3%

Merck's unallocated other revenues are driven by Alliance revenue, including collaborations with AstraZeneca and Sanofi, as well as royalties from its vaccine and pharmaceutical products.

7. Detailed Products

Gardasil

Human Papillomavirus (HPV) vaccine to prevent cervical, vulvar, and vaginal cancers and genital warts

Keytruda

Anti-PD-1 therapy for the treatment of various types of cancer, including melanoma, lung cancer, and kidney cancer

Januvia

DPP-4 inhibitor for the treatment of type 2 diabetes

Isentress

Integrase inhibitor for the treatment of HIV-1 infection

Zepatier

Direct-acting antiviral for the treatment of chronic hepatitis C

Bridion

Neuromuscular blocking agent reversal agent

Noxafil

Antifungal medication for the treatment of invasive aspergillosis and mucormycosis

8. Merck & Co., Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Merck & Co., Inc. faces moderate threat from substitutes due to the presence of alternative treatments and generic drugs in the market.

Bargaining Power Of Customers

Merck & Co., Inc. has a diverse customer base, which reduces the bargaining power of individual customers, making it a low threat.

Bargaining Power Of Suppliers

Merck & Co., Inc. relies on a network of suppliers for raw materials and services, but has some bargaining power due to its large scale of operations.

Threat Of New Entrants

The pharmaceutical industry has high barriers to entry, including significant R&D investments and regulatory hurdles, making it a low threat for Merck & Co., Inc.

Intensity Of Rivalry

The pharmaceutical industry is highly competitive, with many established players, making the intensity of rivalry a high threat for Merck & Co., Inc.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	48.46%
Debt Cost	5.95%
Equity Weight	51.54%
Equity Cost	5.95%
WACC	5.95%
Leverage	94.04%

11. Quality Control: Merck & Co., Inc. passed 4 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

J&J

A-Score: 6.9/10

Value: 3.1

Growth: 4.0

Quality: 8.8

Yield: 6.0

Momentum: 9.5

Volatility: 10.0

1-Year Total Return ->

Gilead Sciences

A-Score: 6.8/10

Value: 3.3

Growth: 3.0

Quality: 9.3

Yield: 7.0

Momentum: 9.5

Volatility: 8.3

1-Year Total Return ->

Amgen

A-Score: 6.3/10

Value: 2.9

Growth: 5.0

Quality: 6.8

Yield: 6.0

Momentum: 9.0

Volatility: 8.3

1-Year Total Return ->

Merck

A-Score: 6.2/10

Value: 4.6

Growth: 6.2

Quality: 8.2

Yield: 6.0

Momentum: 4.5

Volatility: 8.0

1-Year Total Return ->

Bristol-Myers Squibb

A-Score: 5.5/10

Value: 5.0

Growth: 3.9

Quality: 6.5

Yield: 8.0

Momentum: 1.5

Volatility: 8.0

1-Year Total Return ->

Lilly

A-Score: 5.3/10

Value: 0.0

Growth: 7.1

Quality: 7.5

Yield: 2.0

Momentum: 9.5

Volatility: 5.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

10.87%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

5.95%

Merck & Co., Inc. - US58933Y1055

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on MRK

1.c. Company Highlights

Higher Yield

Less Volatile

Expensive

Earnings Beats

Revenues Beats

Better Quality

Earnings Miss

2. Merck's Strong Financial Performance and Growth Prospects

KEYTRUDA's Continued Growth and Pipeline Advancements

Valuation Metrics and Growth Prospects

Future Milestones and Pipeline Potential

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.59%)

6. Segments

Pharmaceutical

Expected Growth: 4.5%

Animal Health

Expected Growth: 5.2%

Unallocated Other Revenues

Expected Growth: 6.3%

7. Detailed Products

Gardasil

Keytruda

Januvia

Isentress

Zepatier

Bridion

Noxafil

8. Merck & Co., Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Merck & Co., Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

117.15$

Current Price

117.15$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA