Merck Is Up 40% This Year, but Is the Keytruda Rebuild Already Priced In?

Key Stats for Merck Stock

• 52-Week Range: $78 to $157
• Market Cap: around $367 billion
• Street Mean Target: around $154
• Forward 2-Year Revenue Growth (CAGR): around 4%
• NTM EV/EBITDA: around 17x
• LTM Gross Margin: 75.9%
• Dividend Yield: 2.3%

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How Merck Earned Its 40% Rally

Merck (MRK) has turned into one of the market’s favorite large pharmaceutical stories this year, with the shares up about 40% as investors grow more confident the company can rebuild once Keytruda loses U.S. patent protection in 2028.

Keytruda is Merck’s immunotherapy, approved across roughly 40 cancer indications, and it brought in $16.4 billion in sales in the first half of 2026, up about 4%.

On the second-quarter call, management said Merck is “substantially stronger, more diversified, and better positioned for sustainable growth” than it was five years ago.

Recent headlines have backed that view up. Japan approved Keytruda Qlex on September 21, a subcutaneous version that shortens treatment time compared with an infusion, and a European advisory committee endorsed Keytruda plus Padcev for bladder cancer on September 18.

Lipfendra, the first oral PCSK9 cholesterol pill, won FDA approval in July, and analysts see blockbuster potential.

The drawdown chart below shows how orderly the climb has been, with a deepest pullback of about 12% in late April and a softer September that leaves the stock about 5% below its high.

Even after slipping about 3.5% over the past month, the shares sit within reach of their 52-week high of around $157, so the obvious question is how much of the pipeline’s success is already in the price.

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What Life After Keytruda Could Look Like

Wall Street is betting the rebuild works, and the revenue and free cash flow chart below shows how much.

Estimates have revenue climbing from $65 billion in 2025 to around $75 billion by 2028 and then leveling off near $76 billion through 2030, which means analysts are not modeling a cliff at all.

Free cash flow is expected to reach around $19 billion in 2026, up from $12.4 billion last year, and to peak near $26 billion in 2028. Merck’s own outlook looks more mixed.

Sales guidance rose to $66.3 billion to $67.3 billion, but non-GAAP EPS guidance dropped to $2.66 to $2.76 from $5.04 to $5.16 because of $14.7 billion in one-time charges for the Cidara and Terns acquisitions, and gross margin guidance slipped to about 81% from 82%.

Those charges also inflate the trailing P/E to roughly 117x, so a forward multiple of around 17x is the fairer yardstick.

Rivals are crowding the same cancers too, including Bristol Myers’ Opdivo, Roche’s Tecentriq and AstraZeneca’s Imfinzi, while newer antibodies that block both PD-1 and VEGF are emerging as a threat to Keytruda.

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Should You Buy MRK Stock?

The bull case rests on a pipeline broad enough to matter, spanning cancer, cholesterol and HIV, along with a 2.3% dividend yield and an Oncology Investor Event on October 26 that could add detail on the post-Keytruda plan.

The bear case is that the Street mean target of around $154 sits only a few percent above the stock, the 2028 patent cliff is still ahead, and competitors are closing in while margin guidance trends lower.

Lipfendra and Keytruda Qlex will say more about the outlook as they scale than any single quarter will.

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Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!