Merck MRK is set to report its second-quarter 2026 earnings on Aug. 4, before market open. The Zacks Consensus Estimate for second-quarter sales is pegged at $16.33 billion, while the same for earnings stands at a loss of 26 cents per share. Estimates for MRK’s 2026 earnings have declined from $4.26 to $2.74 per share over the past 30 days, while those for 2027 have declined from $9.80 per share to $9.72 per share.
The healthcare bellwether’s performance has been solid, with the company exceeding earnings expectations in each of the trailing four quarters. It delivered a four-quarter earnings surprise of 7.75%, on average. In the last reported quarter, the company delivered an earnings surprise of 15.23%, as seen in the chart below.
Earnings Surprise History of Merck
What Does Our Model Say for MRK?
Merck has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell) at present.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Per our proven model, companies with the combination of a positive Earnings ESP and a Zacks Rank #1, #2 (Buy) or #3 (Hold) have a good chance of delivering an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Factors Shaping MRK’s Upcoming Results
Top-line growth in the second quarter is expected to have been driven by higher sales of Merck’s blockbuster PD-1 inhibitor, Keytruda and contributions from new products like Winrevair, Welireg and Capvaxive and the Animal Health segment. These gains are likely to have been partially offset by lower sales of Gardasil and certain other vaccines.
Expected Performance of Merck’s Oncology Drugs
In oncology drugs, Keytruda sales are likely to have been driven by rapid uptake across earlier-stage indications globally as well as continued strong momentum in metastatic indications. The Zacks Consensus Estimate for Keytruda’s sales is $8.06 billion.
Higher alliance revenues from Lynparza, driven by increased demand, may have boosted oncology sales. Please note that Merck markets Lynparza in partnership with AstraZeneca AZN.
Merck has a global strategic collaboration with AstraZeneca to co-develop and co-commercialize Lynparza and Koselugo.
Alliance revenues from Lenvima might have also boosted oncology sales.
Sales of the new drug Welireg are likely to have benefited from higher demand in the United States as well as continued launch uptake in certain international markets. The Zacks Consensus Estimate for Welireg is $214 million.
MRK’s Vaccines, Animal Health Segment and Other Drugs
With regard to the HPV vaccine, Gardasil, ex-U.S. sales are expected to have been hurt by lower demand in China and Japan. The Zacks Consensus Estimate for Gardasil is $1.18 billion.
Sales of some other Merck vaccines, like Rotateq, Vaxneuvance and Proquad, M-M-R II and Varivax vaccines, are also likely to have declined in the second quarter. However, sales of the new vaccine, Capvaxive, are likely to have improved sequentially, driven by demand growth and continued launch uptake in certain European markets.
The company expects minimal sales of the new RSV vaccine, Enflonsia, in the second quarter due to seasonality and increased inventory levels in the market.
In the hospital specialty portfolio, generic competition in certain ex-U.S. markets is likely to have hurt sales of neuromuscular blockade medicine — Bridion injection. However, higher demand is expected to have benefited U.S. sales. The Zacks Consensus Estimate for Bridion is $364.0 million.
Sales of the diabetes franchise (Januvia/Janumet) are expected to have been hurt by lower demand in the United States and China and generic competition in most international markets.
New pulmonary arterial hypertension drug Winrevair’s sales are likely to have gained from continued strong uptake in the United States and early launch uptake in some international markets like Japan and Europe.
The Zacks Consensus Estimate for Merck’s Pharmaceutical unit is $14.28 billion.
Ohtuvayre, added from the October 2025 acquisition of Verona Pharma, should also have boosted sales growth. In the first quarter, sales of Ohtuvayre were hurt by CMS reimbursement changes as well as Medicare deductible resets. On the conference call, Merck had said that the prescription trends had begun to recover from March, and growth is expected to accelerate in the second half of the year as the company increases investments to boost sales of the drug. An update is expected on the call.
In the Animal Health franchise, sales of both livestock and companion animal products are likely to have increased. The Zacks Consensus Estimate for the Animal Health unit is $1.77 billion.
EPS in the second quarter will include costs related to Merck’s acquisition of Terns Pharmaceuticals, which closed in May. Back in April, Merck had estimated that the acquisition would result in a one-time charge of approximately $5.8 billion, or approximately $2.35 per share, as well as financing costs of 12 cents per share.
Nonetheless, a single quarter’s results are not important for long-term investors. Let's delve deeper to understand whether to buy, sell or hold Merck stock.
MRK’s Price Performance & Valuation
Merck’s shares have risen 25.7% so far this year compared with an increase of 16.8% for the industry.
Merck Stock Outperforms Industry
From a valuation standpoint, Merck is not so cheap. Going by the price/earnings ratio, the company’s shares currently trade at 19.25 forward earnings, slightly lower than 19.43 for the industry. However, the stock is trading above its 5-year mean of 12.83. Merck stock is cheaper than some other drugmakers like Eli Lilly LLY, Gilead and J&J JNJ.
MRK Stock Valuation
Investment Thesis on MRK’s Stock
Merck boasts more than six blockbuster drugs in its portfolio, with Keytruda being the key top-line driver. Keytruda has played an instrumental role in driving Merck’s steady revenue growth over the past few years. Merck expects Keytruda to achieve peak sales of $35 billion by 2028. Merck’s other oncology drugs, Welireg, AstraZeneca-partnered Lynparza and Eisai-partnered Lenvima, are also contributing to top-line growth.
Merck’s Animal Health business is also a key contributor to its top-line growth, with sales expected to more than double by the mid-2030s.
Merck is also looking to boost post-Keytruda growth through acquisitions, adding potential blockbuster assets such as Verona Pharma's Ohtuvayre, Cidara's late-stage influenza candidate MK-1406 and Terns' CML therapy TERN-701.
Meanwhile, Merck’s expanding drug pipeline and potential new blockbuster drugs beyond Keytruda look encouraging. Its new products, Winrevair, Welireg and Capvaxive, have begun to contribute significantly to top-line growth. This month, the FDA approved Merck’s Lipfendra (enlicitide), the first FDA-approved oral PCSK9 inhibitor to reduce LDL-C in adults with hypercholesterolemia.
However, Merck is heavily reliant on Keytruda. Though Keytruda may be Merck’s biggest strength and a solid reason to own the stock, the company is excessively dependent on the drug. Keytruda’s core U.S. patent is expected to expire around 2028, with additional patents expiring slightly after that. Keytruda is expected to face significant biosimilar competition around 2028-2029. Once biosimilars enter, Keytruda’s sales are likely to decline sharply.
Sales of Merck’s second-largest product, Gardasil, have been lower in China and Japan. Merck is seeing weakness in the diabetes franchise. Merck also faces rising generic and pricing pressures, with declining sales of Januvia/Janumet, Isentress, Bridion and Dificid expected to weigh on growth.
Short-Term Investors May Exit MRK Stock
Merck has one of the world’s best-selling drugs in its portfolio, generating billions of dollars in revenues. Though Keytruda will lose patent exclusivity in 2028, its sales are expected to remain strong until then.
Merck expects over $70 billion of potential non-risk-adjusted commercial opportunity for the current pipeline by the mid-2030s. This estimate is more than double the peak consensus sales estimate for Keytruda of $35 billion in 2028.
However, Merck faces several near-term challenges, including persistent challenges for Gardasil in China, potential competition for Keytruda, and rising competitive and generic pressure on some of its drugs. However, its new products, strong progress in its pipeline, and business development and acquisitions have increased confidence that Merck may be able to maintain growth even after Keytruda loses exclusivity. Long-term investors may retain the stock on this improved outlook.
However, estimates for Merck have declined sharply to account for costs related to acquisitions. Short-term investors seeking immediate profits may exit the stock.
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This article originally published on Zacks Investment Research (zacks.com).