Merck Stock Seen as 35% Undervalued Amid Cancer Vaccine Hype

Merck (MRK) has seen significant returns over the past five years, delivering a 130.2% gain. Despite this strong performance, its valuation picture is mixed. A Discounted Cash Flow (DCF) estimate suggests the stock may be undervalued by as much as 35.3%, while market multiples indicate it's already priced in.

The company's recent progress in oncology, including a personalized mRNA melanoma vaccine with Moderna and broader use of Keytruda, supports higher long-term cash flow expectations. However, concerns about future loss of exclusivity on some products may limit how much investors are willing to pay today.

Merck scores just 2 out of 6 on broader valuation checks, suggesting the stock is not a clear bargain despite its potential undervaluation. The key question now is whether Merck's pipeline and oncology partnerships can offset patent expiry risks enough to justify both the premium earnings multiple and the implied intrinsic value.