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Merck & Company
(NYSE:MRK)
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Rating:69Neutral
Price Target:
$140.00
▲(6.81% Upside)
Action:Downgraded
Date:08/04/26
MRK scores strongest on financial quality and technical setup: strong free cash flow generation and a constructive uptrend with balanced momentum. The overall score is tempered by an expensive valuation (P/E ~36.6) and earnings volatility/leverage, plus near-term EPS and margin noise from acquisition-related charges and higher financing costs highlighted on the latest call.
Positive Factors
Cash generation
Consistent, sizable free cash flow (~$14.1B TTM, +14%) provides durable internal funding for R&D, launches, dividends, buybacks and debt servicing. Strong cash generation creates a multi-quarter buffer to execute pipeline investments and absorb one-time charges without immediate capital raises.
Negative Factors
Elevated leverage
Meaningful reliance on debt (D/E ~1.07 TTM) limits financial flexibility. Higher leverage increases sensitivity to profit swings and raises interest burden, constraining the company’s ability to ramp discretionary R&D or M&A without adding cost or reducing shareholder returns during prolonged downturns.
Read all positive and negative factors
Positive Factors
Negative Factors
Cash generation
Consistent, sizable free cash flow (~$14.1B TTM, +14%) provides durable internal funding for R&D, launches, dividends, buybacks and debt servicing. Strong cash generation creates a multi-quarter buffer to execute pipeline investments and absorb one-time charges without immediate capital raises.
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
$321.57B
Dividend Yield2.58%
Average Volume (3M)10.42M
Price to Earnings (P/E)36.6
Beta (1Y)0.32
Revenue Growth2.70%
EPS Growth-48.28%
CountryUS
Employees75,000
SectorHealthcare
Sector Strength45
IndustryDrug Manufacturers - General
Share Statistics
EPS (TTM)3.56
Shares Outstanding2,469,824,500
10 Day Avg. Volume8,822,586
30 Day Avg. Volume10,418,009
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 Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$137.18Price Target Upside4.66% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering17
EPS Forecast (FY)2.79
Revenue Forecast (FY)$66.86B
Merck & Company Business Overview & Revenue Model
Company Description
Merck & Co., Inc. (MRK) is a global, research-driven biopharmaceutical company that discovers, develops, manufactures, and commercializes human health prescription medicines and vaccines, as well as animal health products. The company’s portfolio ...
How the Company Makes Money
Merck primarily makes money by selling branded prescription pharmaceuticals and vaccines, generating revenue when hospitals, clinics, pharmacies, governments, and other healthcare channels purchase its products for patient use. Its largest revenue...
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.
Read all updates
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
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
131.07
Price Trends
123.14
Positive
118.92
Positive
110.83
Positive
Market Momentum
1.86
Positive
53.22
Neutral
29.84
Neutral
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 131.07 is above the 20-day moving average (MA) of 127.33, above the 50-day MA of 123.14, and above the 200-day MA of 110.83, indicating a bullish trend. The MACD of 1.86 indicates Positive momentum. The RSI at 53.22 is Neutral, neither overbought nor oversold. The STOCH value of 29.84 is Neutral, 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 |
|---|---|---|---|---|---|---|---|
70 Outperform | $161.66B | 17.55 | 42.16% | 2.49% | 3.83% | 55.01% | |
69 Neutral | $321.57B | 36.58 | 17.93% | 2.56% | 2.70% | -48.28% | |
69 Neutral | $103.78B | 22.77 | 5.52% | 5.58% | 23.68% | -30.90% | |
68 Neutral | $286.53B | 23.79 | 29.64% | 3.06% | 2.33% | -4.08% | |
66 Neutral | $142.54B | 19.09 | 8.37% | 7.01% | 1.36% | -5.39% | |
66 Neutral | £195.91B | 25.34 | 21.68% | 1.86% | 4.71% | 21.16% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% |
* Healthcare Sector Average
MRK
Merck & Company
128.00
51.13
66.51%
GILD
Gilead Sciences
135.25
27.77
25.84%
NVS
Novartis
153.27
41.95
37.68%
PFE
Pfizer
25.41
3.05
13.64%
SNY
Sanofi
42.68
-1.73
-3.89%
GB:AZN
AstraZeneca
11,740.00
875.35
8.06%
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.