Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Position Status | Return(%)* |
|---|---|---|---|---|---|---|---|---|
| 27 Oct, 25 | MRK | Buy | USD 87.49 | USD 91.89 | USD 96.2 | 22 days | Closed |
10.76%
|
*Return(%) represent the percentage change between the entry price and exit price of the recommendation.
Data Powered by EOD Historical Data (“EODHD”).
Merck & Co., Inc. operates as a healthcare company worldwide. It operates through two segments, Pharmaceutical and Animal Health. The Pharmaceutical segment offers human health pharmaceutical products in the areas of oncology, hospital acute care, immunology, neuroscience, virology, cardiovascular, and diabetes, as well as vaccine products, such as preventive pediatric, adolescent, and adult vaccines. The Animal Health segment discovers, develops, manufactures, and markets veterinary pharmaceuticals, vaccines, and health management solutions and services, as well as digitally connected identification, traceability, and monitoring products. The company serves drug wholesalers and retailers, hospitals, and government agencies; managed health care providers, such as health maintenance organizations, pharmacy benefit managers, and other institutions; and physicians and physician distributors, veterinarians, and animal producers. It has collaborations with AstraZeneca PLC; Bayer AG; Eisai Co., Ltd.; Ridgeback Biotherapeutics LP; and Gilead Sciences, Inc. to jointly develop and commercialize long-acting treatments in HIV, as well as a collaboration with Bionomics to identify novel a7 nAChR PAMs suitable for the treatment of cognitive disorder; and clinical trial collaboration and supply agreement with Ankyra Therapeutics to evaluate ANK-101 in combination with KEYTRUDA (pembrolizumab) in patients with advanced solid tumors, as well as a clinical trial collaboration and supply agreement with Phanes Therapeutics, Inc. to evaluate PT886 in combination with KEYTRUDA for the treatment of claudin 18.2 positive gastric or gastroesophageal junction adenocarcinomas, as well as a development and commercialization agreement with Daiichi Sankyo Company, Limited to jointly develop and commercialize Daiichi Sankyo's DXd antibody drug conjugate (ADC) candidates and a collaboration with HiberCell, Inc. Merck & Co., Inc. was founded in 1891 and is headquartered in Rahway, New Jersey.
WINREVAIR Growth and Rapid Market Adoption: WINREVAIR generated USD 336 million in Q2 FY25 (USD 149 million in Q2 FY24), marking a 125% increase, demonstrating strong uptake in pulmonary arterial hypertension and effective commercial execution
Robust Oncology Expansion: KEYTRUDA sales surged 9% year-over-year to USD 8.0 billion in Q2 FY25 (USD 7.3 billion in Q2 FY24), reflecting expanded indications and deeper market penetration across earlier-stage cancers and new combination regimens
Earnings Contraction: Non-GAAP EPS decreased to USD 2.13 in Q2 FY25 (USD 2.28 in Q2 FY24), a 7% decline, largely due to lower vaccine revenue and a one-time license-related expense, despite margin improvement and strong oncology performance
GARDASIL Sales Decline: GARDASIL sales plunged 55% year-over-year to USD 1.1 billion in Q2 FY25 (USD 2.5 billion in Q2 FY24), driven by significant destocking and weak demand in China, impacting total company revenue by roughly nine percentage points
Merck faces a key investment risk related to its heavy reliance on KEYTRUDA for revenue growth amid impending loss of exclusivity (LOE), coupled with exposure to regional vaccine demand fluctuations, particularly in China
| Entry Price | Support* | Target 1** | Target 2** |
|---|---|---|---|
| 87.49 | 74.5 | 91.89 | 96.2 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
**Target prices may vary by ±0.5% depending on market volatility.
Solid Operational Foundation and Strategic Progress: During Q2 FY25, Merck & Co., Inc. reported results consistent with management expectations, underlining the company’s resilient operational structure. Revenue stood at USD 15.8 billion, reflecting a 2% decline year-over-year (both nominal and ex-foreign exchange). The quarter’s results were primarily affected by a sharp USD 1.3 billion decline in GARDASIL sales in China, which reduced overall growth by approximately nine percentage points. Excluding this factor, underlying growth was 7%, driven by the strong performance of the oncology portfolio and robust contributions from new product launches such as WINREVAIR and CAPVAXIVE.
Strength in Oncology and Pipeline Expansion: Merck’s oncology segment remained the key growth driver, with KEYTRUDA sales increasing 9% to USD 8.0 billion. Growth was supported by expanded indications, including early-stage cancers and combination regimens. The company also achieved its 10th earlier-stage approval for KEYTRUDA, reinforcing its leadership in immuno-oncology. Other oncology assets, such as WELIREG, posted a 29% increase in sales to USD 162 million, while Lynparza and Lenvima grew 15% and 5%, respectively, demonstrating the breadth and strength of the company’s cancer treatment portfolio.
Vaccines Segment Impacted by China Weakness: The vaccines business reported a notable contraction, with GARDASIL sales falling 55% to USD 1.1 billion, primarily due to inventory destocking and weak demand in China. Outside China, performance remained relatively stable, with only minor declines in Japan and modest 2% growth in the U.S. due to favorable pricing and higher demand. However, Merck successfully offset part of this decline through strong uptake in CAPVAXIVE, which achieved USD 129 million in sales, and VAXNEUVANCE, which grew 20% year-over-year.
Cardiovascular and Animal Health Growth Momentum: In cardiopulmonary, WINREVAIR continued to be a standout performer, generating USD 336 million in Q2 sales and surpassing USD 1 billion in cumulative revenue within 15 months of launch. The product’s successful rollout in the U.S. and imminent launch in Japan underscore Merck’s executional excellence. The Animal Health segment also delivered strong results, with 11% sales growth to USD 1.6 billion, supported by robust livestock demand and improved supply dynamics across all species.
Financial Discipline and Profitability Metrics: Merck maintained healthy profitability metrics, with gross margin expanding to 82.2% (up 1.3 percentage points year-over-year) driven by favorable product mix. Operating expenses increased 7% to USD 6.6 billion, reflecting disciplined investment in R&D and pipeline progression, including a USD 200 million charge linked to the Hengrui license agreement. The company reported a non-GAAP EPS of USD 2.13, compared to USD 2.28 in Q2 FY24, primarily impacted by the GARDASIL decline.
Outlook and Capital Allocation: Merck reaffirmed its full-year FY25 revenue guidance between USD 64.3–65.3 billion, representing 1–2% growth ex-FX. The company introduced a multi-year optimization initiative aimed at redeploying USD 3 billion in cost savings toward higher-growth opportunities in oncology, vaccines, and cardiopulmonary care. A balanced capital allocation approach was maintained, with USD 3.2 billion spent on R&D, USD 2.1 billion on dividends, and USD 1.3 billion on share repurchases during the quarter.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on Merck & Company, Inc (NYSE: MRK) at the closing market price of USD 87.49, as on Oct 24, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Healthcare Industry: Drug Manufacturers - General
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| MRK Merck & Company Inc |
2.56 2.25% | 115.92 | 59.83 | 12.33 | 4.50 | 6.47 | 4.94 | 23.79 |
| LLY Eli Lilly and Company |
-42.135 4.04% | 1002.00 | 78.14 | 31.95 | 16.34 | 45.83 | 16.65 | 54.36 |
| JNJ Johnson & Johnson |
2.76 1.20% | 233.51 | 29.17 | 14.33 | 3.74 | 5.18 | 3.80 | 15.22 |
| ABBV AbbVie Inc |
0.55 0.24% | 226.19 | 61.52 | 14.86 | 5.62 | 51.62 | 6.76 | 20.58 |
| AZN AstraZeneca PLC ADR |
-3.94 2.09% | 184.47 | 38.69 | 16.31 | 4.67 | 5.46 | 5.20 | 17.74 |
Data Powered by EOD Historical Data (“EODHD”).
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels as on October 27, 2025. The reference data in this report has been partly sourced from REFINITIV.
Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned has been achieved and is subject to the factors discussed above.
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Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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