Key Stats for Merck Stock
- This-Week Performance: 6%
- 52-Week Range: $73 to $123
- Valuation Model Target Price: $174
- Implied Upside: 43%
Value your favorite stocks like Merck & Co. with 5 years of analysts’ forecasts using TIKR’s new Valuation Model (It’s free) >>>
What Happened?
Merck & Co., Inc. stock rose about 6% this week, finishing near $122 per share, as investors reacted to the company’s fourth-quarter 2025 earnings report and initial 2026 outlook. Shares climbed steadily through the week, reflecting improving confidence in Merck’s earnings durability and pipeline-driven growth.
The stock moved higher this week after Merck reported Q4 2025 revenue of $16.4 billion, up 5% year over year (4% excluding FX), and issued 2026 guidance calling for revenue of $65.5 billion to $67 billion and non-GAAP EPS of $5.00 to $5.15, despite roughly $2.5 billion of expected headwinds from generic competition, IRA pricing, and contract changes.
Results showed continued strength in KEYTRUDA, with sales rising 5% to $8.4 billion, alongside growing contributions from newer launches including WINREVAIR at $467 million and OHTUVAYRE at $178 million, helping offset a 35% decline in GARDASIL sales to $1 billion driven by weaker demand in China and Japan.
The earnings call also refocused attention on Merck’s expanding late-stage pipeline and recent acquisitions, with updates across oncology, HIV, cardiometabolic, respiratory, and infectious disease programs.
CEO Rob Davis highlighted the scale of the opportunity ahead, stating that “we now have line of sight to over $70 billion of potential commercial opportunity by the mid-2030s,” reinforcing the view that pipeline execution and new launches can support growth beyond Keytruda’s eventual loss of exclusivity.
See analysts’ growth forecasts and price targets for Merck & Co. (It’s free) >>>
Is Merck Undervalued?
Under valuation assumptions, the stock is modeled using:
- Revenue Growth (CAGR): 4.8%
- Operating Margins: 37.8%
- Exit P/E Multiple: 15.9x
Revenue growth assumptions reflect a business moving beyond peak dependence on Keytruda while still benefiting from oncology lifecycle extensions, vaccines, and a growing late-stage pipeline rather than aggressive top-line acceleration.
Earnings durability is supported by demand across key franchises, expanding contributions from newer oncology assets, and incremental revenue from recent partnerships and acquisitions that are beginning to improve forward visibility.
This setup places greater weight on margin durability and execution than on rapid revenue growth. Merck’s high gross margins, disciplined cost structure, and scale allow incremental revenue gains to translate efficiently into earnings growth even in a moderate growth environment.
Results over the next year hinge on execution across several higher-impact areas. Oncology pipeline progress remains central, as successful late-stage readouts, regulatory approvals, and label expansions would help reinforce confidence in earnings continuity beyond Keytruda.
At the same time, capital allocation supported by strong free cash flow, including dividends and continued reinvestment into the pipeline, helps reinforce per-share earnings growth.
At current levels, Merck appears undervalued, with future performance driven by pipeline execution, franchise durability, and margin resilience rather than aggressive multiple expansion.
Estimate a company’s fair value instantly (Free with TIKR) >>>
Value Any Stock in Under 60 Seconds (It’s Free)
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
See a stock’s true value in under 60 seconds (Free with TIKR) >>>
