Merck & Company (MRK) AI Stock Analysis

• Market Cap: $281.39B
• Dividend Yield: 3.12%
• Average Volume (3M): 10.56M
• Price to Earnings (P/E): 15.6
• Beta (1Y): 0.57
• Revenue Growth: 1.59%
• EPS Growth: 58.02%
• Country: US
• Employees: 73,000
• Sector: Healthcare
• Sector Strength: 45
• Industry: Drug Manufacturers - General
• EPS (TTM): 2.04
• Shares Outstanding: 2,482,022,500
• 10 Day Avg. Volume: 10,581,127
• 30 Day Avg. Volume: 10,562,432
• PEG Ratio: <0.01
• Price to Book (P/B): 5.44
• Price to Sales (P/S): 3.93
• P/FCF Ratio: 13.92
• Enterprise Value/Market Cap: 1.11
• Enterprise Value/Revenue: 4.87
• Enterprise Value/Gross Profit: 6.31
• Enterprise Value/Ebitda: 11.30
• 1Y Price Target: $122.74
• Price Target Upside: 5.96% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 19
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 78 Outperform
• Price Target: $129.00 ▲(11.36% Upside)

MRK scores well due to strong underlying financial performance and a technically supported uptrend, reinforced by a reasonable P/E and solid dividend yield. The main offset is earnings-call-driven near-term pressure from vaccine softness, pricing/generic headwinds, and the sizable one-time acquisition charge weighing on reported 2026 results.

Positive Factors

High profitability and margins

Merck's very high gross and net margins indicate durable pricing power and operational efficiency across pharmaceuticals, vaccines and biologics. Strong margins support sustained R&D investment, dividends and M&A capacity, allowing the company to fund long-term growth despite product transitions.

KEYTRUDA commercial resilience

KEYTRUDA's continued sales growth and broader indication uptake demonstrate durable oncology leadership and an expanding addressable market. Ongoing label expansions, earlier-stage adoption and planned QLEX IV-to-subQ conversion support a steady, long-term revenue base that cushions LOE on older assets.

Deep, de-risked pipeline and launch runway

A broad late-stage pipeline with numerous Phase III trials, readouts and near-term regulatory milestones provides structural growth optionality. Multiple de-risking events and new launches diversify future revenues, reducing dependence on legacy products and supporting durable top-line expansion over the next several years.

Negative Factors

Large one-time acquisition charge

The sizable non-deductible Sidera upfront charge materially reduces reported 2026 EPS and raises the effective tax rate, while associated financing increases other expense. This weakens near-term reported profitability and can constrain capital allocation flexibility until synergies and returns from the acquisition materialize.

Generics and pricing reforms headwind (~$2.5B)

Sustained revenue pressure from patent expirations, government pricing reforms and contract restructurings reduces predictable cash flows from legacy products. This structural erosion forces greater reliance on new launches and M&A to replace lost revenue and maintain long-term margin levels.

Vaccine demand softness (Gardasil, RSV)

Material declines in Gardasil sales (notably China and Japan) and weaker-than-expected RSV adoption reveal persistent commercial and demand risks in vaccines. Lower vaccine volumes and slower uptake increase the difficulty of sustaining revenue and margin contributions from this traditionally stable franchise.

Merck & Company Business Overview & Revenue Model

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.

How the Company Makes Money

Merck generates revenue primarily through the sales of its pharmaceutical products, which include a wide range of prescription medications and vaccines. The company’s revenue model is largely based on the development and commercialization of new drugs, which often involve extensive research and development (R&D) investments. Key revenue streams include the sales of its flagship products, vaccines, and biologics. Additionally, Merck engages in strategic partnerships and collaborations with other pharmaceutical companies, research institutions, and government entities to enhance its R&D capabilities and accelerate product development. These partnerships may contribute to revenue through shared development costs and milestone payments. Furthermore, Merck benefits from a strong patent portfolio, which provides exclusivity for its products and helps maximize profit margins during the patent protection period. Overall, the company’s ability to innovate and bring new therapies to market, coupled with its established brand reputation, plays a crucial role in sustaining its earnings.

Merck & Company Financial Statement Overview

Summary

Strong profitability and expansion (TTM gross margin 78.3%, net margin 29.6%, revenue growth 97.3%). Balance sheet is solid with moderate leverage (debt-to-equity 0.80) but rising debt is a watch item. Cash generation is good versus earnings, yet free cash flow growth is negative (-11.4% TTM), tempering the score.

Income Statement

Merck & Company shows strong profitability with a TTM gross profit margin of 78.3% and a net profit margin of 29.6%. The EBIT margin is robust at 35.4%, indicating efficient operations. Revenue growth is impressive at 97.3% TTM, showcasing significant expansion. Overall, the income statement reflects strong growth and profitability, although the high growth rate may not be sustainable long-term.

Balance Sheet

The company's debt-to-equity ratio is 0.80, indicating a moderate level of leverage. Return on equity is strong at 38.9%, demonstrating effective use of shareholder funds. The equity ratio is healthy, suggesting a stable financial position. However, the increase in total debt over the years could pose a risk if not managed carefully.

Cash Flow

Operating cash flow to net income ratio is 0.60, indicating good cash generation relative to earnings. Free cash flow to net income ratio is 0.76, showing solid cash flow management. However, the free cash flow growth rate is negative at -11.4% TTM, which could be a concern if it continues. Overall, cash flow management is solid but shows some areas for improvement.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	64.23B	64.17B	60.12B	59.28B	48.70B	41.52B
Gross Profit	49.58B	48.98B	43.99B	41.87B	35.08B	27.90B
EBITDA	27.66B	25.71B	6.91B	21.32B	17.90B	10.18B
Net Income	19.03B	17.12B	365.00M	14.52B	13.05B	7.07B
Balance Sheet
Total Assets	129.55B	117.11B	106.67B	109.16B	105.69B	91.59B
Cash, Cash Equivalents and Short-Term Investments	18.21B	13.69B	7.09B	13.19B	8.10B	8.05B
Total Debt	41.37B	38.27B	36.27B	31.98B	34.63B	33.42B
Total Liabilities	77.64B	70.73B	69.04B	63.10B	67.44B	66.18B
Stockholders Equity	51.85B	46.31B	37.58B	45.99B	38.18B	25.32B
Cash Flow
Free Cash Flow	13.05B	18.10B	9.14B	14.71B	9.66B	5.57B
Operating Cash Flow	17.07B	21.47B	13.01B	19.09B	14.11B	10.25B
Investing Cash Flow	-3.98B	-7.73B	-14.08B	-4.96B	-16.55B	-9.44B
Financing Cash Flow	-9.68B	-7.03B	-4.81B	-9.12B	2.59B	-2.83B

Merck & Company Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 115.84
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: 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 115.84 is above the 20-day moving average (MA) of 109.76, above the 50-day MA of 104.85, and above the 200-day MA of 87.06, indicating a bullish trend. The MACD of 2.10 indicates Negative momentum. The RSI at 70.55 is Negative, neither overbought nor oversold. The STOCH value of 81.23 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MRK.

Merck & Company Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NVS	80 Outperform	$287.74B	20.45	32.93%	2.87%	11.53%	-15.21%
MRK	78 Outperform	$281.39B	15.57	39.51%	3.12%	1.59%	58.02%
GILD	78 Outperform	$176.11B	21.99	40.53%	2.52%	2.76%	6407.19%
PFE	73 Outperform	$151.58B	19.60	10.59%	6.65%	4.44%	128.96%
SNY	69 Neutral	$115.24B	13.08	6.76%	4.58%	-9.32%	120.62%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%

Merck & Company Corporate Events

Merck & Co. Closes $7 Billion Notes Offering

On December 4, 2025, Merck & Co., Inc. completed a significant financial maneuver by closing an underwritten public offering of various notes totaling $7 billion. This strategic move is expected to bolster the company’s financial position and provide capital for future growth initiatives, potentially impacting its market standing and stakeholder interests.

The most recent analyst rating on (MRK) stock is a Buy with a $120.00 price target. To see the full list of analyst forecasts on Merck & Company stock, see the MRK Stock Forecast page.