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Merck & Company
(NYSE:MRK)
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Rating:72Outperform
Price Target:
$133.00
▲(11.70% Upside)
Action:Upgraded
Date:05/29/26
MRK scores solidly on strong cash generation and durable high-margin operations, supported by positive price trends. The score is tempered by earnings volatility (including large deal-related charges), moderate leverage, and valuation opacity from a negative P/E, despite raised/narrowed non-GAAP guidance and continued KEYTRUDA momentum.
Positive Factors
Strong cash generation
Consistently high and growing free cash flow (~$14.1B TTM, +14%) provides durable funding for R&D, launches, dividends and buybacks. That cash conversion (FCF ≈79% of net income) underpins strategic flexibility and reduces reliance on external financing over the medium term.
Negative Factors
Moderate leverage
Debt-to-equity near 1.07 indicates meaningful reliance on leverage versus peers. With sizable outstanding debt, large M&A or cyclical weak profits could strain credit metrics, limit flexibility for opportunistic investment, and increase interest expense sensitivity over the medium term.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong cash generation
Consistently high and growing free cash flow (~$14.1B TTM, +14%) provides durable funding for R&D, launches, dividends and buybacks. That cash conversion (FCF ≈79% of net income) underpins strategic flexibility and reduces reliance on external financing over the medium term.
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
$319.99B
Dividend Yield3.12%
Average Volume (3M)10.54M
Price to Earnings (P/E)36.4
Beta (1Y)0.36
Revenue Growth2.70%
EPS Growth-48.28%
CountryUS
Employees73,000
SectorHealthcare
Sector Strength45
IndustryDrug Manufacturers - General
Share Statistics
EPS (TTM)3.56
Shares Outstanding2,469,824,500
10 Day Avg. Volume13,838,781
30 Day Avg. Volume10,540,235
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 Cap1.03
Enterprise Value/Revenue5.02
Enterprise Value/Gross Profit6.61
Enterprise Value/Ebitda17.52
Forecast
1Y Price Target
$138.80Price Target Upside16.57% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering18
EPS Forecast (FY)5.14
Revenue Forecast (FY)$66.66B
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 primarily makes money by selling branded prescription medicines and vaccines. Revenue is generated when its products are purchased by wholesalers, distributors, hospitals, pharmacies, governments, and other healthcare providers, with demand ...
Merck & Company Earnings Call Summary
Earnings Call Date:Apr 30, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 04, 2026
Earnings Call Sentiment Positive
The call mixed strong commercial and pipeline execution with near-term financial and clinical headwinds. Merck reported solid Q1 revenue growth (+5% YoY; $16.3B), robust KEYTRUDA momentum (+8%, $8.0B), notable product and regulatory milestones (IDVYNSO approval, priority reviews for I-DXd and multiple WELIREG filings), accelerating new-product launches and AI partnerships, and raised/narrowed 2026 guidance. Offsetting these positives were a very large one-time $9B Cidara charge that drove a GAAP loss and distorted tax rate, an expected one-time R&D impact from the proposed Terns deal (~$5.8B), meaningful declines in GARDASIL (-22%), a failed LITESPARK-012 readout, and several near-term reimbursement/seasonality headwinds for specific products (ENFLONSIA, OHTUVAYRE). Overall the company emphasized long-term pipeline value and raised guidance despite near-term charges and select clinical setbacks.Positive Updates
Quarterly Revenue Growth and Raised Guidance
Total company revenue of $16.3 billion in Q1, up 5% year-over-year (3% ex-FX). Management narrowed and raised 2026 revenue guidance to $65.8B–$67.0B (growth of 1%–3%, including ~1ppt FX) and raised non-GAAP EPS guidance to $5.04–$5.16 (including ~$0.10 FX benefit).
Negative Updates
Large One-Time Cidara Charge and GAAP Loss
Recorded a $9 billion one-time operating charge related to the Cidara acquisition, producing a pretax loss and an effective tax rate of negative 43.5% for the quarter. Reported GAAP loss of $1.28 per share in Q1, which included a negative impact of approximately $3.62 per share from the Cidara charge.
Read all updates
Q1-2026 Updates
Positive
Negative
Quarterly Revenue Growth and Raised Guidance
Total company revenue of $16.3 billion in Q1, up 5% year-over-year (3% ex-FX). Management narrowed and raised 2026 revenue guidance to $65.8B–$67.0B (growth of 1%–3%, including ~1ppt FX) and raised non-GAAP EPS guidance to $5.04–$5.16 (including ~$0.10 FX benefit).
Read all positive updates
Company Guidance
Merck narrowed and raised the midpoint of its 2026 non‑GAAP guidance, forecasting revenue of $65.8–$67.0 billion (growth of 1%–3%, including ~1 percentage‑point positive FX impact using mid‑April rates) with a gross margin of ~82%; operating expenses of $36.0–$36.8 billion (range excludes the proposed Terns acquisition and other potential large BD items); other expense of ~$1.3 billion; a full‑year tax rate of 23.5%–24.5% (reflecting the nondeductible Cidara charge); ~2.48 billion shares outstanding; and EPS of $5.04–$5.16 (including an approximate $0.10 FX benefit). Management noted Q1 revenue of $16.3 billion (up 5% year‑over‑year, 3% ex‑FX) and a Q1 loss per share of $1.28 that included a $3.62 per‑share onetime Cidara charge, and warned the Terns deal is expected to add a onetime R&D charge of about $5.8 billion (~$2.35 per share) plus an ~ $0.12 EPS drag in 2026; they remain on pace for roughly $3 billion of share repurchases for the year.Merck & Company Financial Statement Overview
Summary
Income Statement
74
Positive
Balance Sheet
66
Positive
Cash Flow
78
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 65.59B | 64.93B | 64.17B | 60.12B | 59.28B | 48.70B |
| Gross Profit | 49.79B | 46.73B | 48.98B | 43.99B | 41.87B | 35.08B |
| EBITDA | 18.78B | 28.26B | 25.71B | 6.91B | 21.32B | 17.90B |
| Net Income | 8.94B | 18.25B | 17.12B | 365.00M | 14.52B | 13.05B |
Balance Sheet | ||||||
| Total Assets | 128.69B | 136.87B | 117.11B | 106.67B | 109.16B | 105.69B |
| Cash, Cash Equivalents and Short-Term Investments | 5.70B | 14.56B | 13.69B | 7.09B | 13.19B | 8.10B |
| Total Debt | 49.12B | 50.53B | 38.27B | 36.27B | 31.98B | 34.63B |
| Total Liabilities | 82.75B | 84.20B | 70.73B | 69.04B | 63.10B | 67.44B |
| Stockholders Equity | 45.88B | 52.61B | 46.31B | 37.58B | 45.99B | 38.18B |
Cash Flow | ||||||
| Free Cash Flow | 14.12B | 12.36B | 18.10B | 9.14B | 14.71B | 9.66B |
| Operating Cash Flow | 17.89B | 16.47B | 21.47B | 13.01B | 19.09B | 14.11B |
| Investing Cash Flow | -22.46B | -13.74B | -7.73B | -14.08B | -4.96B | -16.55B |
| Financing Cash Flow | 852.00M | -1.92B | -7.03B | -4.81B | -9.12B | 2.59B |
Merck & Company Technical Analysis
Positive
119.07
Price Trends
116.20
Positive
116.91
Positive
105.83
Positive
Market Momentum
3.26
Negative
66.65
Neutral
86.65
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MRK, the sentiment is Positive. The current price of 119.07 is below the 20-day moving average (MA) of 120.75, above the 50-day MA of 116.20, and above the 200-day MA of 105.83, indicating a bullish trend. The MACD of 3.26 indicates Negative momentum. The RSI at 66.65 is Neutral, neither overbought nor oversold. The STOCH value of 86.65 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 | $153.66B | 16.68 | 42.16% | 2.52% | 3.83% | 55.01% | |
72 Outperform | $319.99B | 36.38 | 17.93% | 3.12% | 2.70% | -48.28% | |
71 Outperform | $291.02B | 22.80 | 31.54% | 2.87% | 5.60% | 9.68% | |
71 Outperform | £225.47B | 28.77 | 22.41% | 1.53% | 4.64% | 26.75% | |
69 Neutral | $102.56B | 8.53 | 14.41% | 4.58% | 11.19% | -0.23% | |
64 Neutral | $138.61B | 18.56 | 8.37% | 6.65% | 1.36% | -5.39% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% |
* Healthcare Sector Average
MRK
Merck & Company
129.56
51.25
65.44%
GILD
Gilead Sciences
131.27
22.36
20.53%
NVS
Novartis
159.90
40.34
33.74%
PFE
Pfizer
24.32
0.60
2.52%
SNY
Sanofi
43.16
-3.29
-7.08%
GB:AZN
AstraZeneca
14,456.00
4,297.06
42.30%
Merck & Company Corporate Events
Executive/Board ChangesShareholder Meetings
Merck Shareholders Back Board, Pay and Auditor Ratification
Positive
May 28, 2026
At Merck Co., Inc.’s Annual Meeting of Shareholders held on May 26, 2026, all nominated directors were elected to the board, including CEO Robert M. Davis and other incumbent and independent members, with large majorities supporting most ca...
Business Operations and StrategyPrivate Placements and Financing
Merck Completes $6 Billion Multi-Tranche Senior Notes Offering
Positive
May 22, 2026
On May 22, 2026, Merck Co., Inc. completed an underwritten public offering of multiple tranches of senior notes with maturities ranging from 2028 to 2056, including floating rate notes and fixed-rate notes carrying coupons between 4.300% and 5.85...
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.