Merck looks like a stock the market discounted too early for a problem that still sits years ahead. The reason is simple: Keytruda is not fading yet, and the latest lung-cancer data suggests Merck is still extending the franchise rather than just defending it. A roughly 65% reduction in progression or death for sac-TMT plus Keytruda in advanced NSCLC is exactly the kind of readout that buys time, especially when Keytruda sales still grew 12% in the first quarter to $8.0 billion. At $123.15, this still looks like a high-quality pharma name with more durability than bears want to admit.
The most important fact here is that Merck’s core business is still growing in plain sight. First-quarter company sales rose 5% to $16.3 billion, and Keytruda alone delivered $8.0 billion, up 12% nominally. That matters because the bear case has been built around eventual loss of exclusivity, while the actual operating reality is that the flagship product is still putting up double-digit growth off an enormous base. Management reinforced that picture by raising 2026 revenue guidance to $65.8 billion to $67.0 billion, which is not what near-term erosion looks like.
The latest oncology data gives that growth story more credibility. In advanced non-small cell lung cancer, sac-TMT plus Keytruda cut the risk of progression or death by about 65% versus Keytruda alone in a late-stage trial. Lung cancer is one of Keytruda’s biggest markets, so this is not some side-program headline; it goes directly to the question of how long Merck can keep the franchise clinically relevant and commercially powerful. Merck is also showing unusual breadth heading into ASCO, with more than 100 abstracts across over 25 cancer types, which supports the argument that this is still an expanding oncology platform, not a single-asset story running on fumes.
The quality profile also gives the bull case more backbone than a simple headline rally. Merck carries a TickerSpark Score of 77, with an elite 95 in Profitability and a perfect 100 in Momentum. That lines up with the underlying business: gross margin is 75.9%, operating margin is 27.6%, and the stock is trading above its 20-day, 50-day, and 200-day moving averages while sitting just below its 52-week high of $125.14. Against Pfizer, the contrast is straightforward: Merck has a cleaner growth narrative right now, stronger operating momentum, and a market that is rewarding execution instead of waiting for a turnaround story.
The pushback is obvious and legitimate: the Keytruda patent cliff is enormous, and Merck itself is preparing for it. The stock also is not cheap on a trailing basis at 33.87 times earnings, and headline growth in the broader business is modest, with revenue up just 1.2% year over year in the trailing figures. If the market decides every new label expansion is just another finger in the dam, MRK can still look expensive relative to peers like Novartis at 21.81 times earnings or Gilead at 16.12.
That still misses the point of the current setup. Stocks do not usually break out because a long-term risk vanished; they break out because the market realizes the risk was front-loaded while the earnings power remains intact. Merck has beaten earnings in five of the last six reported quarters, consensus still sits at Buy with 25 buys against 11 holds and one sell, and the stock has outperformed the healthcare sector by 19 percentage points year to date. The cliff is real, but the market is being forced to respect how much cash flow and clinical relevance Merck can still squeeze out before it arrives.
That leaves MRK looking like a name we would still own rather than fade after the latest move. The setup is not about pretending the patent issue disappears; it is about recognizing that positive lung-cancer data, rising franchise sales, and near-term catalysts at ASCO and the June 19 PDUFA can keep extending the timeline on the bear case. As long as the stock keeps holding above its 50-day moving average of $115.85 and the oncology updates keep reinforcing franchise durability, the trend deserves the benefit of the doubt.
What would change our mind is not a generic valuation complaint but evidence that Keytruda growth is rolling over before replacement assets are ready. Until that happens, Merck still looks like one of the better large-cap pharma positions to own, and we would rather be in MRK than PFE while the market relearns that durability has value.
