Key Takeaways
- Merck stock rose nearly 5% Thursday on a third-quarter beat, with sales up 5% to $18.1 billion, and higher 2026 guidance midpoints.
- Keytruda Qlex, the injectable version of Merck’s top drug, sold $830 million, a sign patients are switching before IV Keytruda’s 2028 patent expiry.
- Bristol Myers Squibb is making the same switch with Opdivo, and Eli Lilly’s beat Thursday, like Merck’s, had some one-time help.
- Merck trades above its usual forward P/E, and its 2027 guidance in February is the next test.
Merck (MRK) stock rose nearly 5% Thursday after the drugmaker beat third-quarter estimates and raised the midpoints of its full-year guidance.
CEO Robert M. Davis touted “potentially practice-changing advances in oncology” from this month’s ESMO meeting.
But the number I’d watch is Keytruda Qlex, the under-the-skin version of Merck’s top drug. Bristol Myers Squibb (BMY) is making the same switch with Opdivo. And like Eli Lilly (LLY), Merck had some one-time help. Lilly’s own beat sent its shares up more than 7.5% intraday Thursday, though they closed up just 1.3%.
A beat with some help
Sales rose 5% to $18.1 billion, and non-GAAP EPS was $2.49, down 3% from a year ago. Analysts expected $17.31 billion and $2.08, according to LSEG.
Merck now guides to $2.77 to $2.82 of 2026 non-GAAP EPS, up from $2.66 to $2.76. That raise absorbs a $0.12 charge for the SciBrunch licensing deal. Yet a lower tax rate, now 32% to 33% from 35% to 36%, does some of the lifting.
But about $550 million of Merck’s drug sales growth came from the timing of customers’ purchases. Lilly’s 39% revenue jump also included about $900 million of one-time benefits. Still, Lilly raised its 2026 revenue guidance midpoint by $5.5 billion. Merck’s rose $250 million.
TIKR tracks 27 analysts on Merck. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Merck, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Merck’s Analyst Ratings
Qlex is carrying Keytruda
IV Keytruda’s U.S. compound patent expires in December 2028, while Qlex is patented in the U.S. to 2043. Every patient switched before then is revenue biosimilars can’t take.
Qlex sold $830 million, nearly 10% of Keytruda’s sales and up from $463 million last quarter. Analysts expected $649 million, according to StreetAccount. IV Keytruda fell 5%, so all of the family’s growth came from Qlex.
That cuts both ways, though. The family grew just 6% to $8.6 billion, so much of Qlex’s gain is existing patients changing formats.
Bristol’s under-the-skin Opdivo Qvantig sold $334 million, about 12% of Opdivo’s sales, while IV Opdivo fell 6%. Bristol is a bit further along by share, but Qlex brings in more than twice the dollars. Can Qvantig grow fast enough to offset IV Opdivo?
Bristol also has a stake in Merck’s growth. It collects a 22% royalty on Winrevair, Merck’s pulmonary arterial hypertension drug, which nearly doubled to $694 million.
The switch is already in the price
Merck went into Thursday at 17x forward earnings, above its five-year average of 14.2x:
At Thursday’s close, it’s even higher.
Halozyme has also won court orders blocking Qlex’s European version, Keytruda SC, in several countries, the latest on Oct. 7.
Here’s where I land. Qlex is the best evidence yet that Keytruda’s patent expiry will hit Merck more gently than feared, and that justifies Thursday’s jump. Still, the stock has already priced in a lot of that.
Of course, the real test is Merck’s 2027 guidance, due with its fourth-quarter report on Feb. 2. Merck already expects underlying operating expenses to grow at a mid to high single digit rate next year. So Qlex has to keep carrying the load.
So what is Merck stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Merck could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
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!
