Shares of Merck MRK hit a fresh 52-week high yesterday on renewed investor confidence over the company’s long-term growth prospects and recent positive developments surrounding its pipeline progress, regulatory approvals, as well as merger and acquisition activity.
The stock’s recent strength comes on the back of the recently announced positive top-line data from a phase III INTerpath-001 study, which evaluated Merck and Moderna’s MRNA personalized cancer therapy combo in certain patients with high-risk melanoma, a serious form of skin cancer.
Moderna’s investigational mRNA-based individualized neoantigen therapy, intismeran autogene (mRNA-4157 or V940), is being studied in combination with Merck’s blockbuster PD-L1 inhibitor, Keytruda (pembrolizumab), as an adjuvant treatment for patients with completely resected stage IIB-IV melanoma.
The INTerpath-001 study met its primary endpoint of recurrence-free survival and key secondary endpoint of distant metastasis-free survival.
Besides the positive development in the melanoma study, investors also seemed to be intrigued by Merck’s strong pipeline, new product launches and recently acquired assets, which are expected to play an important role in driving the next phase of growth. Importantly, these opportunities should also help mitigate the potential impact of Keytruda’s eventual loss of exclusivity in 2028.
Merck’s biggest revenue driver, Keytruda, recorded sales worth $16.40 billion in the first half of 2026, up nearly 4.2% year over year. Keytruda Qlex, the subcutaneous formulation of Keytruda, contributed $590 million during the period. Though Keytruda will lose patent exclusivity in 2028, its sales are expected to remain strong until then.
However, Keytruda faces competition from other PD-L1 inhibitors, including Bristol Myers’ BMY Opdivo, Roche’s Tecentriq and AstraZeneca’s Imfinzi.
BMY’s Opdivo, like Keytruda, is approved across multiple cancer types, including lung, melanoma and kidney cancers. Bristol Myers recorded $4.63 billion in Opdivo sales in the first half of 2026, down 3.9% year over year.
Several of Merck’s newer products, including pulmonary arterial hypertension drug Winrevair, the 21-valent pneumococcal conjugate vaccine Capvaxive and cancer drug Welireg, have demonstrated encouraging growth momentum, reinforcing management’s confidence in the post-Keytruda growth strategy.
Meanwhile, Merck has gained approval for a few other products recently, including respiratory syncytial virus (RSV) antibody Enflonsia (clesrovimab), Idvynso, a once-daily, single-tablet, two-drug regimen of doravirine and islatravir, and Lipfendra (enlicitide), an oral PCSK9 inhibitor designed to help lower LDL cholesterol in adults with hypercholesterolemia.
Merck also strengthened its pipeline with the 2025 acquisition of Verona Pharma, adding chronic obstructive pulmonary disease (COPD) drug Ohtuvayre, with multibillion-dollar sales potential. Meanwhile, the 2026 buyouts of Cidara Therapeutics and Terns Pharmaceuticals added late-stage influenza and hematology/cancer pipeline assets, respectively.
Merck continues to expect more than $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.
Notably, on the second-quarter conference call, management noted that the company is “substantially stronger, more diversified, and better positioned for sustainable growth” than five years ago.
With management reiterating confidence in its recent business developments, successful execution on new product launches and upcoming pipeline milestones could be critical to sustaining investor confidence and supporting growth as the end of 2026 draws closer.
MRK's Price Performance, Valuation and Estimates
Year to date, shares of Merck have rallied 50.9% compared with the industry’s 19.9% rise. The stock has also outperformed the sector and the S&P 500 during the same time frame, as seen in the chart below.
Image Source: Zacks Investment Research
From a valuation standpoint, Merck appears to be trading at a premium compared with the industry. Going by the price/earnings ratio, MRK’s shares currently trade at 21.33 forward earnings, higher than 19.44 for the industry. The stock is also trading above its 5-year mean of 12.87.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2026 earnings per share has declined from $3.21 to $2.97 while the same for 2027 has decreased from $9.71 to $9.66 over the past 30 days.
Image Source: Zacks Investment Research
MRK's Zacks Rank
Merck currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).