# Merck & Co. (MRK) Sector: Pharmaceuticals | Field | Value | |---|---| | Price | $148.76 | | Market cap | $367B | | Intrinsic value source | Analysts | | Data as of | 2026-11-10 | | Next earnings | 2027-02-02 (estimate) | Analysts: Bullish Picks: Research only Discount category: Close to intrinsic value ## In short The market doubts that Merck can replace Keytruda sales before biosimilars and Medicare price setting from late 2028, and strong launches and late-stage results through 2028 can close the gap. ## Themes and gap - Themes: Regulation and courts (regulation-legal) - Gap type: Slow (slow) - Why: The new drugs must replace Keytruda sales as biosimilars and Medicare price setting start from late 2028, and that takes several years. ## About Merck & Co., known as MSD outside the United States and Canada, develops and sells prescription medicines, vaccines and animal health products. Its largest product is Keytruda, a cancer immunotherapy, with sales of $31.7 billion in 2025, or 49% of total sales. Other main products are the Gardasil vaccines against HPV, Winrevair for pulmonary arterial hypertension, Welireg and Capvaxive. Animal Health had sales of $6.4 billion in 2025. Total sales were $65.0 billion in 2025, and Merck guides $66.8 billion to $67.3 billion for 2026. From October 2025 to May 2026 it bought Verona Pharma, Cidara Therapeutics and Terns Pharmaceuticals to add new medicines. ## Thesis The market doubts that Merck can replace the sales of Keytruda, which were 49% of total sales in 2025. Merck expects that biosimilar competition can start in the U.S. in December 2028, that Medicare price setting for Keytruda can start on January 1, 2029, and that exclusivity in Europe ends in 2031. Januvia, Janumet and Bridion already lost U.S. exclusivity in 2026. Merck paid $9.2 billion for Cidara and $6.8 billion for Terns in 2026 to add new drugs, and the charges for these purchases cut 2026 non-GAAP EPS to $2.77 to $2.82. For the gap to close, three things must be true. Patients must move to Keytruda Qlex, the injection under the skin, before biosimilars arrive; its sales were $830 million in Q3 2026. New products such as Winrevair, Capvaxive, Enflonsia and Lipfendra must grow fast enough to fill most of the Keytruda decline. Late-stage programs such as sacituzumab tirumotecan, intismeran autogene and MK-1406 must succeed and get approval. The Q4 2026 report with the 2027 guidance, expected in early February 2027, gives the next test. The full evidence comes from 2027 to 2029, as biosimilars and price setting start. If the launches and trials keep working, the gap can close over the next two to three years. ## Checkpoints - Feb 2, 2027 (estimate): Q4 2026 results and 2027 guidance. Status: Pending. Watch: 2027 sales guidance above 2026 with Keytruda Qlex and new launches rising passes; guidance for lower sales fails. - 2027 (estimate): FDA decision on sacituzumab tirumotecan. Status: Pending. Watch: Approval in endometrial cancer under the priority review passes; a rejection or a long delay fails. ## Balance sheet - Cash: $9.7B - Debt: $53.8B - Net debt: $44.1B - Undrawn credit line: $6.0B, to May 2031 - Debt due within 12 months: $4.1B Merck funds itself mainly with long-term notes. At September 30, 2026, debt was $53.8 billion: $49.7 billion of long-term debt and $4.1 billion of loans payable and current debt. Cash and cash equivalents were $9.55 billion and short-term investments were $100 million, down from $14.57 billion of cash at the end of 2025, because Merck paid $8.8 billion for Cidara and $5.8 billion for Terns, net of cash acquired. To pay for Terns, Merck drew a $6.0 billion 364-day term loan and then repaid it, and on May 22, 2026 it sold $6.0 billion of notes due from 2028 to 2056. Interest expense was $1.55 billion in the first nine months of 2026, up from $946 million a year earlier. Operating cash flow was $15.8 billion and capital spending was $2.9 billion in the same nine months. The $6.0 billion credit facility matures in May 2031 and was not drawn. As of 2026-09-30. Sources: - https://www.sec.gov/Archives/edgar/data/310158/000031015826000248/mrk-20260930.htm - https://www.sec.gov/Archives/edgar/data/310158/000110465926119825/tm2628203d1_ex99-1.htm - https://www.sec.gov/Archives/edgar/data/310158/000162828026037738/mrk-20260522.htm ## Dividends - Dividend yield: 2.3% (last 12 months, at the current price) - Paid per share, last 12 months: $3.40 (4 payments) - Current annual rate: $3.40 ($0.85 x 4 a year) - Payout ratio: 45% of the earnings of the last fiscal year (the year ended 2025-12-31) - Latest ex-dividend date: 2026-09-15, $0.85 per share - Growth over the last 5 years: 6.0% a year - Growth over the last 10 years: 6.8% a year Dividends per share by year: 2016: $1.7653, 2017: $1.8034, 2018: $1.8989, 2019: $2.1565, 2020: $2.3664, 2021: $2.6102, 2022: $2.80, 2023: $2.96, 2024: $3.12, 2025: $3.28. Source: company filings and market data, read on 2026-11-09. ## Recent events - 2026-10-29: Merck reported Q3 2026 results. Sales grew 5% to $18.1 billion. Keytruda and Keytruda Qlex sales grew 6% to $8.6 billion, with $830 million from Keytruda Qlex, and Winrevair sales grew 93% to $694 million. Non-GAAP EPS was $2.49, including a one-time charge of $0.12 per share for a license agreement with SciBrunch. Merck raised the midpoint of its 2026 guidance to sales of $66.8 billion to $67.3 billion and non-GAAP EPS of $2.77 to $2.82. The FDA accepted for priority review an application for sacituzumab tirumotecan in endometrial cancer. - 2026-08-24: The U.S. District Court for the District of Columbia granted summary judgment for the U.S. government in Merck's lawsuit against the Medicare Drug Price Negotiation Program of the Inflation Reduction Act. - 2026-08-04: Merck reported Q2 2026 results. Sales grew 5% to $16.6 billion, and Keytruda and Keytruda Qlex sales grew 5% to $8.4 billion. A charge of $2.31 per share for the Terns purchase gave a non-GAAP loss of $0.13 per share. The FDA approved Lipfendra (enlicitide), the first once-daily oral PCSK9 inhibitor, to lower LDL cholesterol. - 2026-05-22: Merck sold $6.0 billion of notes due from 2028 to 2056, with fixed coupons of 4.300% to 5.850% and one floating-rate series. - 2026-02-03: Merck reported 2025 results. Sales grew 1% to $65.0 billion, Keytruda sales grew 7% to $31.7 billion, and Gardasil sales fell 39% to $5.2 billion. Non-GAAP EPS was $8.98. Merck completed the purchase of Cidara Therapeutics for $9.2 billion in January 2026 and recorded a charge of $9.0 billion for it. ## Latest news and filings - Last earnings: 2026-10-29 (8-K: https://www.sec.gov/Archives/edgar/data/310158/000110465926119825/) - Next earnings: 2027-02-02 (expected; the company has not confirmed it) | Filed | Form | Headline | Period end | XBRL document | Link | | --- | --- | --- | --- | --- | --- | | 2026-11-04 | 10-Q | Quarterly report for the period ended Sep 30, 2026 | 2026-09-30 | mrk-20260930 | https://www.sec.gov/Archives/edgar/data/310158/000031015826000248/mrk-20260930.htm | | 2026-10-29 | 8-K | Earnings release | | | https://www.sec.gov/Archives/edgar/data/310158/000110465926119825/tm2628203d1_8k.htm | | 2026-10-13 | 8-K | Change of directors or officers | | mrk-20261009 | https://www.sec.gov/Archives/edgar/data/310158/000031015826000237/mrk-20261009.htm | | 2026-08-07 | 10-Q | Quarterly report for the period ended Jun 30, 2026 | 2026-06-30 | mrk-20260630 | https://www.sec.gov/Archives/edgar/data/310158/000031015826000212/mrk-20260630.htm | | 2026-08-04 | 8-K | Earnings release | | | https://www.sec.gov/Archives/edgar/data/310158/000110465926090045/tm2621496d1_8k.htm | | 2026-05-28 | 8-K | Shareholder vote results | | | https://www.sec.gov/Archives/edgar/data/310158/000110465926067509/tm2615833d1_8k.htm | | 2026-05-22 | 8-K | Other company news | | mrk-20260522 | https://www.sec.gov/Archives/edgar/data/310158/000162828026037738/mrk-20260522.htm | | 2026-05-04 | 10-Q | Quarterly report for the period ended Mar 31, 2026 | 2026-03-31 | mrk-20260331 | https://www.sec.gov/Archives/edgar/data/310158/000162828026029802/mrk-20260331.htm | | 2026-04-30 | 8-K | Earnings release | | | https://www.sec.gov/Archives/edgar/data/310158/000110465926052081/tm2612241d1_8k.htm | | 2026-02-24 | 10-K | Annual report for the period ended Dec 31, 2025 | 2025-12-31 | mrk-20251231 | https://www.sec.gov/Archives/edgar/data/310158/000031015826000063/mrk-20251231.htm | Every filing on SEC EDGAR (CIK 310158): https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000310158&type=&dateb=&owner=include&count=40 ## Risks - High: Keytruda gave 49% of sales in 2025. Biosimilar competition can start in the U.S. in December 2028, Merck expects Medicare price setting for it from January 1, 2029, and exclusivity in Europe ends in 2031. Merck expects U.S. Keytruda sales to fall materially after that. - Medium: Merck buys new drugs at high prices. The Cidara and Terns purchases cost $16.0 billion in 2026, and debt rose to $53.8 billion. If these programs fail, the money is lost. - Medium: Gardasil sales fell 39% in 2025 because of low demand in China, and Merck expects the U.S. benefit from public-sector buying patterns in 2026 to mostly reverse in 2027. - Low: Januvia, Janumet and Bridion lost U.S. exclusivity in 2026. Merck expects to stop U.S. sales of Bridion in 2027. ## Links - Page: https://picks.utilarium.app/company/MRK/ - History of changes: https://picks.utilarium.app/company/MRK/history/ - JSON with full history: https://picks.utilarium.app/data/company/MRK.json > Picks is a personal record of stock picks. 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