Freedom Broker experts maintained their “Hold” rating on Merck & Co. (MRK) shares with a target price of $125. At the current price of $129.40, this implies a downside potential of about 3.4%. In the experts’ view, the company’s quarterly results confirmed the resilience of its core business; however, the heavy reliance on Keytruda and the risks that persist after its patent protection expires limit the stock’s upside.
What Merck is
Merck & Co. (MRK) is one of the world’s largest pharmaceutical companies, specializing in the development of prescription drugs, vaccines, and animal health solutions. The main revenue driver remains the oncology drug Keytruda, which already accounts for about half of the company’s sales.
New drugs are growing faster than expected, but Keytruda remains the main driver
Merck’s results are assessed as neutral, the experts note. The new generation of drugs is showing strong growth rates; however, the company’s financial performance is still determined by the dynamics of Keytruda, Freedom Broker analysts point out. This medicine helps the immune system recognize cancer cells and activate the body’s own defense mechanisms to fight the tumor.
In Q2 2026, Merck’s revenue increased 5% year on year to $16.6 billion, beating the market consensus forecast. Keytruda franchise sales rose 5% to $8.37 billion, while the subcutaneous form of the drug generated $463 million in revenue. Analysts note that the drug retains a strong position in oncology; however, the high level of penetration in the main indications is gradually limiting the scope for further acceleration in growth.
At the same time, the new generation of drugs continues to post growth rates ahead of expectations. Sales of the pulmonary hypertension drug WINREVAIR grew 75% to $588 million, the oncology drug WELIREG rose 67% to $271 million, and the pneumococcal conjugate vaccine CAPVAXIVE added 42% to $184 million. In the experts’ view, these products confirm the successful scaling of Merck’s new portfolio, although they are not yet able to offset the future loss of Keytruda exclusivity.
Gardasil remains a factor of uncertainty
Sales of the human papillomavirus vaccine Gardasil increased by only 4% to $1.17 billion. Despite recovering demand in the Asia-Pacific region and Europe, analysts consider international sales—primarily in China—the main factor that will determine the drug’s further trajectory.
An additional positive factor was sales of BRIDION, a drug for reversing neuromuscular blockade, which rose 8% to $497 million, as generic pressure proved weaker than expected.
The company raised guidance, but the stock assessment did not change
Merck raised its 2026 revenue guidance to $66.3–67.3 billion from the previous range of $65.8–67 billion. At the same time, the company revised its adjusted EPS guidance to $2.66–2.76, reflecting large expenses related to deals with Cidara and Terns Pharmaceuticals.
Freedom Broker believes the updated guidance does not materially affect the company’s investment case. Despite solid growth in new drugs and the approval of Lipfendra, the analysts maintain their “Hold” recommendation, as risks associated with the future loss of Keytruda exclusivity and uncertainty around the recovery of Gardasil sales remain key to the stock’s valuation.
Investor recommendations on Merck
At the end of July, Freedom Broker analysts maintained their “Hold” recommendation on Merck shares but raised the target price from $110 to $125. Despite the improved estimate, the experts noted that the stock remains overvalued relative to fundamentals: at a market price of about $130.4, the target implied a downside potential of roughly 4%. At the time, the analysts pointed out that strong Keytruda sales and the prospects for new drugs are already largely reflected in the share price, while the risks around a recovery in Gardasil sales and the upcoming loss of Keytruda exclusivity continue to constrain the company’s investment potential.
This is not an individual investment recommendation.