Merck Stock Dips 7 Percent Is This a Buying Opportunity

Merck’s stock (MRK) has dropped 7.2% over the past month, but investors are viewing this decline as a temporary pullback rather than a sign of underlying business weakness. The company’s stock has surged about 60% over the past year, reaching a 52-week high of approximately $157 in late August. Confidence in Merck’s long-term growth prospects remains high, particularly as the company works to mitigate the impact of the upcoming patent expiration of its blockbuster cancer drug, Keytruda, after 2028.

Keytruda continues to be a major revenue driver for Merck, accounting for over 55% of its pharmaceutical sales. The drug is approved for more than 45 indications in the U.S. and is used to treat 19 different types of cancer. Merck is exploring innovative combinations, such as pairing Keytruda with LAG3 and CTLA-4 inhibitors, as well as developing a personalized mRNA therapeutic cancer vaccine in collaboration with Moderna. The company expects Keytruda to achieve peak sales of $35 billion by 2028.

Beyond Keytruda, Merck is strengthening its pipeline with new products like Winrevair, Welireg, and Ohtuvayre, which are scaling rapidly. The company is also pursuing acquisitions to bolster its future growth, such as the recent deals for Verona Pharma, Cidara, and Terns Pharmaceuticals. However, Merck faces challenges, including declining sales of its Gardasil vaccine franchise due to weaker demand in key markets and generic pressure on other drugs like Januvia and Bridion.

The upcoming patent loss of Keytruda in 2028 poses a significant risk, as biosimilar competition is expected to sharply reduce sales. Despite this, Merck’s stock has outperformed both its industry and the S&P 500 this year, with a 32.6% increase so far. The company’s forward price-to-earnings ratio stands at 17.44, slightly below the industry average of 17.60.