MRK Looks 22.5% Overvalued on GF Value™ Amid Dividend Sustainabi

Merck (MRK) stock rose 87% in the past year, despite revenue growth of 4.6% to $66.6B. The increase is attributed to investor optimism about future drugs, including the acquisition of Terns Pharmaceuticals for $5.7B. Merck's pipeline showed progress with FDA approvals and positive trial results, but KEYTRUDA's patent expiration in 2028 poses a risk. The company raised its 2026 revenue guidance to $66.3B-$67.3B, indicating a slight deceleration.

Merck & Co. (NYSE: MRK) received a positive recommendation from a European regulatory committee for its cancer therapy Keytruda in combination with Padcev to treat adults with resectable muscle-invasive bladder cancer. The recommendation is based on Phase 3 KEYNOTE-B15 study data, which showed a 47% reduction in event-free survival events and a 35% reduction in the risk of death compared to standard chemotherapy. The European Commission is expected to make a final decision by Q4 2026. Merck shar

Merck (MRK) announced the EU's CHMP recommended approval of KEYTRUDA plus Padcev for resectable muscle-invasive bladder cancer, based on Phase 3 trial results. The combination showed improvements in event-free survival, overall survival, and pathologic complete response. The European Commission's decision is expected by Q4 2026. MRK shares were down 0.24% in pre-market trading.

The Trump administration announced 100% tariffs on foreign-manufactured drugs, aiming to incentivize U.S. production. Companies like Pfizer and Johnson & Johnson are negotiating. Affected drugs include Entresto (Novartis), Keytruda (Merck), Lenvima (Eisai), and Ozempic/Wegovy (Novo Nordisk). Prices could double without deals.

Merck reported Q2 2026 revenue of $16.6B (+5% YOY) but a GAAP net loss of $1.34B due to acquisition-related charges. Adjusted EPS fell to -$0.13 from $2.13. Merck raised its 2026 sales forecast to $66.3B-$67.3B but cut adjusted EPS guidance to $2.66-$2.76. Analysts expect Q3 2026 EPS of $2.27, down 12% YOY. HSBC and Leerink raised price targets to $172 and $161, respectively. Merck's dividend yield is 2.36%.

Eli Lilly (LLY) reported Q2 revenue of $23B, up 48% YoY, driven by Mounjaro and Zepbound. Merck (MRK) saw 5% growth, with KEYTRUDA nearing peak penetration. Lilly raised FY2026 guidance to $85-$87B and has an 86% gross margin. Merck's P/E is 15x, appealing to income investors. Lilly's pipeline includes retatrutide and Foundeo, while Merck focuses on new launches like Lipvendra.