Is MRK a Buy? What to Consider in 2026
Short answer
The bull case for MRK (MRK) rests on Keytruda's remaining runway is substantial: Keytruda recorded roughly $31.7 billion in sales in 2025, up 7 percent year over year, and management projects peak sales near $35 billion by 2028. Revenue (FY 2025) is ~$65.0 billion. If you believe that thesis holds, the real questions become position sizing and overlap, not timing. The main risk to that view: The central risk is Keytruda concentration: the drug accounts for roughly half of total company revenue, and its primary U.S. Whether MRK is a buy comes down to whether you believe the thesis. This is informational, not a recommendation, and Walnut is not an investment adviser.
Merck and Co., Inc. (NYSE: MRK) is a global research-intensive biopharmaceutical company headquartered in Rahway, New Jersey. It discovers, develops, manufactures, and markets prescription medicines, vaccines, and biologic therapies across oncology, infectious disease, cardiovascular, and diabetes, alongside a substantial Animal Health segment that sells vaccines and medicines for livestock and companion animals. The company operates under the MSD name outside the United States and Canada. Revenue flows primarily from pharmaceutical product sales, with oncology representing more than 60 percent of pharmaceutical revenue. Keytruda, a PD-1 inhibitor approved in more than 40 cancer indications, is the world's best-selling drug and the dominant revenue driver. Other meaningful contributors include the Gardasil HPV vaccine franchise, pulmonary arterial hypertension therapy Winrevair, pneumococcal vaccine Capvaxive, antiviral Lagevrio, and the Animal Health portfolio led by the Bravecto parasite treatment and Allflex livestock intelligence products. Founded in 1891 as the U.S. subsidiary of the German chemical company E. Merck (now Merck KGaA, a legally separate company), Merck and Co. became fully independent after World War I, went public, and built its modern identity through decades of vaccine innovation and the mid-2010s discovery and commercialization of Keytruda. Robert M. Davis has served as chairman and chief executive officer since 2021, steering the company through Keytruda's commercial peak and into a strategic pivot toward pipeline diversification, including the acquisition of Prometheus Biosciences, Harpoon Therapeutics, and Verona Pharma, as well as a landmark partnership with Moderna on personalized mRNA cancer vaccines.
What's the case for buying MRK?
Keytruda's remaining runway is substantial
Keytruda recorded roughly $31.7 billion in sales in 2025, up 7 percent year over year, and management projects peak sales near $35 billion by 2028. The FDA-approved subcutaneous formulation, Keytruda Qlex, was cleared in September 2025 and offers a more convenient dosing route that could retain patient loyalty even after intravenous biosimilars enter the market, effectively extending the commercial franchise beyond 2030 in some patient segments.
A tripling of the Phase III pipeline provides post-cliff optionality
Merck's late-stage pipeline has nearly tripled since 2021, now encompassing more than 50 active clinical programs with over 30 in Phase 3. Management has outlined a potential $70 billion in non-risk-adjusted commercial opportunities from the current pipeline by the mid-2030s, anchored by new oncology combinations, Winrevair's expansion into heart failure indications, and MK-0616, an oral PCSK9 inhibitor with potential to reach a broad cholesterol treatment population.
Newer commercial launches are already generating revenue
Winrevair, approved for pulmonary arterial hypertension, reached $1.4 billion in sales in its first full year of commercialization in 2025. Capvaxive, Merck's 21-valent pneumococcal vaccine, recorded $759 million in 2025 sales and carries blockbuster potential as it competes for adult immunization share. These products demonstrate that Merck's diversification beyond Keytruda is moving from pipeline aspiration to commercial reality.
Cost discipline and cash generation support the transition
Merck is executing a $3 billion cost-reduction program targeting completion by end of 2027, with savings fully reinvested to support new launches and R&D. The company reported a gross margin near 75 percent in fiscal year 2025 and net income of approximately $18.3 billion on revenues of $65 billion, providing substantial free cash flow to fund M&A, dividends, and capital investment in U.S. manufacturing capacity.
What are the risks to MRK?
The central risk is Keytruda concentration: the drug accounts for roughly half of total company revenue, and its primary U.S. patents expire in late 2028, at which point biosimilars from companies including Celltrion and Samsung Bioepis are positioned to enter and compress pricing. This cliff is compounded by IRA Medicare price cuts already reducing Januvia reimbursement by 79 percent starting in 2026, creating a multi-billion-dollar annual headwind from drug pricing reform. Gardasil faces its own pressure from weak China demand and a CDC recommendation change that reduces the number of doses in the pediatric schedule, and near-term earnings growth is constrained by acquisition-related charges and tariff costs estimated at $200 million annually at current levels. The timing gap between Keytruda's revenue decline and the pipeline's commercial maturity, expected around the mid-2030s, is the key uncertainty investors must weigh.
How is MRK valued? (as of 2026-06-27)
- Revenue (FY 2025): ~$65.0 billion
- Net Income (FY 2025): ~$18.3 billion
- Diluted EPS (FY 2025, GAAP): ~$7.28
- Gross Margin (FY 2025): ~74.8%
- P/E Ratio (TTM, as of June 25, 2026): ~34.9x
- Share Price (June 25, 2026): ~$123.91
Merck's trailing P/E of roughly 34.9x sits about 43 percent above its own 10-year median of 24.4x and above the drug manufacturers industry median of approximately 20.6x, reflecting a market that is pricing in continued Keytruda momentum and pipeline optionality rather than near-term earnings compression. The elevated multiple is somewhat counterintuitive given the 2028 patent cliff, but can be read as the market assigning value to the post-cliff pipeline and the subcutaneous Keytruda lifecycle extension. On an EPS-excluding-acquisition-charges basis, the stock's forward valuation looks more moderate, and GuruFocus rates MRK as fairly valued with a GF Value estimate of approximately $118.
How do you decide if MRK is a buy?
Rather than asking whether MRK is a buy in the abstract, it tends to help to answer four questions:
- Thesis: do you believe the case above, and is it still true today?
- Time horizon: a single stock can be volatile, so a longer horizon absorbs more of the swings.
- Position sizing: a thesis can be right and the sizing still wrong; decide how much of your portfolio one name should be.
- Overlap: check whether you already hold MRK indirectly through an index or sector ETF before adding more.
For the full picture, see the MRK stock guide (what the company does, the ETFs that hold it, similar stocks, and the themes it fits). In Walnut you can ask its AI about MRK against your real portfolio and see your actual exposure before deciding.
The bottom line on MRK
The bottom line: MRK's story right now is Keytruda's remaining runway is substantial, with revenue (fy 2025) at ~$65.0 billion. If you believe that narrative continues, the call is about sizing MRK sensibly and checking overlap with what you own; if you doubt it (the risk: the central risk is Keytruda concentration: the drug accounts for roughly half of total company revenue, and its primary U.S.), it is not for you. Decide from the thesis, not the ticker. Walnut is not an investment adviser.
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FAQ
Is MRK a good stock to buy right now?
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The case for MRK right now is Keytruda's remaining runway is substantial, with revenue (fy 2025) at ~$65.0 billion. If you believe that thesis holds, MRK is a way to own it and the real questions are sizing and overlap, not timing; the main risk to that view is the central risk is Keytruda concentration: the drug accounts for roughly half of total company revenue, and its primary U.S. So it comes down to whether you believe the thesis. Walnut is not an investment adviser and this is not a recommendation.
What does MRK do?
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Merck and Co., Inc.
What are the main risks of MRK?
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The central risk is Keytruda concentration: the drug accounts for roughly half of total company revenue, and its primary U.S. patents expire in late 2028, at which point biosimilars from companies including Celltrion and Samsung Bioepis are positioned to enter and compress pricing. This cliff is compounded by IRA Medicare price cuts already reducing Januvia reimbursement by 79 percent starting in 2026, creating a multi-billion-dollar annual headwind from drug pricing reform. Gardasil faces its own pressure from weak China demand and a CDC recommendation change that reduces the number of doses in the pediatric schedule, and near-term earnings growth is constrained by acquisition-related charges and tariff costs estimated at $200 million annually at current levels. The timing gap between Keytruda's revenue decline and the pipeline's commercial maturity, expected around the mid-2030s, is the key uncertainty investors must weigh.
What does Merck do?
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Merck is a global biopharmaceutical company that discovers, develops, and sells prescription medicines, vaccines, and animal health products. Its largest business is human health pharmaceuticals, dominated by the cancer immunotherapy Keytruda, which accounts for roughly half of total revenue. Other key products include the Gardasil HPV vaccine, the Winrevair cardiovascular drug, and a large animal and companion animal health portfolio.
Is MRK a good stock to buy right now?
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That depends on your time horizon and risk tolerance. Merck generates roughly $65 billion in annual revenue with strong margins and pays a dividend, but Keytruda's patent expiry in 2028 creates a known revenue cliff. Investors who believe the pipeline can bridge that gap may find the current valuation reasonable. Those with shorter horizons may prefer to wait for clearer evidence of post-cliff revenue diversification.
Does MRK pay a dividend?
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Yes. Merck has paid a quarterly dividend consistently for many years and has grown it for more than 15 consecutive years. As of mid-2026, the indicated quarterly dividend is $0.85 per share, implying an annual yield near 2.7 to 3 percent depending on share price. Dividend sustainability is supported by the company's strong operating cash flow, though the 2028 patent cliff is a factor long-term income investors should consider.
What is the biggest risk to investing in Merck?
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The largest single risk is Keytruda concentration. The drug represents roughly half of total revenue, and its primary U.S. patents expire in 2028, after which biosimilars are expected to enter and compress revenue significantly. Compounding this is the IRA Medicare price negotiation impact already cutting reimbursement for legacy drugs, ongoing weakness in Gardasil China sales, and uncertainty about whether pipeline products can reach commercial scale fast enough to offset the gap.
Walnut is informational and is not an investment adviser. This page is educational and not a recommendation to buy or sell MRK; figures are approximate and dated, and your own situation, time horizon, and risk tolerance should drive any decision. Verify current data before investing.