Merck shares have climbed more than 32% over the past three months, yet twelve of fifteen Wall Street analysts maintain sell or underperform ratings. Consensus 2026 earnings estimates have been trimmed by an average of 8% since October, reflecting concerns that patent expirations for Keytruda in 2028 will erode margins. Meanwhile, HPV vaccine Gardasil volumes declined roughly 12% year-over-year in Q3 as emerging competitors capture share. With free cash flow growth slowing to low single digits, investors remain cautious despite the recent uptick.

On January 12, Merck management stunned investors by upping its long-term pipeline target to $70 billion in annual revenue by the mid-2030s, up from prior guidance of $60 billion. That confidence injected a 10% month-to-month stock surge, but skeptics note that only $30 billion is earmarked for cardiometabolic therapies, with respiratory and infectious disease programs accounting for $20 billion apiece. Given typical mid-stage compound attrition rates of 60%, some strategists warn the lofty target may be difficult to achieve and could leave the current recovery overstated.

Keytruda still represents over 50% of Merck’s pharmaceutical revenue, yet Q3 oncology sales grew just 5% year-over-year to $5.4 billion, a slowdown from 12% growth in the first half. Investors are now focused on whether the upcoming Q4 release can reverse this trend, with consensus models forecasting a moderate acceleration to 7% growth. Merck has flagged multiple new indication filings in melanoma and lung cancer scheduled for submission by mid-year, which could provide a catalyst if approved on schedule.