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Rahway, New Jersey-based Merck & Co., Inc. (MRK) functions as a healthcare company. Valued at $265.3 billion by market cap, the company delivers health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products, which it markets directly and through its joint ventures.
Shares of this pharmaceutical giant have underperformed the broader market over the past year. MRK has gained 10.2% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 15.4%. However, in 2026, MRK stock is up 2.9%, surpassing the SPX’s 1.8% rise on a YTD basis.
Narrowing the focus, MRK’s underperformance is also apparent compared to the iShares U.S. Pharmaceuticals ETF (IHE). The exchange-traded fund has gained about 24.7% over the past year. However, MRK’s returns on a YTD basis outshine the ETF’s 1.8% gains over the same time frame.
MRK is underperforming due to heightened regulatory scrutiny, pricing pressures, and looming patent cliffs for key drugs, which face generic competition. Moreover, slowing Keytruda growth, weak Winrevair sales, and declining Gardasil sales in China are also weighing on sentiment.
On Oct. 30, 2025, MRK shares closed down marginally after reporting its Q3 results. Its adjusted EPS of $2.58 topped Wall Street expectations of $2.36. The company’s revenue was $17.3 billion, topping Wall Street forecasts of $17.1 billion. MRK expects full-year adjusted EPS in the range of $8.93 to $8.98, and expects revenue in the range of $64.5 billion to $65 billion.
For fiscal 2025, ended in December 2025, analysts expected MRK’s EPS to grow 17% to $8.95 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 27 analysts covering MRK stock, the consensus is a “Moderate Buy.” That’s based on 15 “Strong Buy” ratings, one “Moderate Buy,” 10 “Holds,” and one “Strong Sell.”
This configuration is more bullish than a month ago, with 14 analysts suggesting a “Strong Buy.”
On Jan. 28, Nico Chen from DBS maintained a “Buy” rating on MRK with a price target of $130, implying a potential upside of 20% from current levels.
The mean price target of $115.12 represents a 6.3% premium to MRK’s current price levels. The Street-high price target of $135 suggests an upside potential of 24.6%.
