Merck has delivered a 32% share price increase over the past three months, but the stock remains on sell lists at most brokerages. Consensus earnings estimates for fiscal 2026 have been cut by 8% since October, reflecting growing concerns over margin erosion and competitive pressures. Analysts highlight the upcoming loss of exclusivity for Keytruda in major markets by mid-2028, which could lead to a 25% revenue decline for the flagship immuno-oncology franchise. At the same time, sales of Gardasil have fallen by 15% year-over-year in the U.S. due to increased competition and vaccine hesitancy, offsetting gains elsewhere in Merck’s portfolio.

On January 12, Merck’s management surprised investors by forecasting that a suite of next-generation therapies in cardiometabolic, respiratory and infectious diseases could generate $70 billion in annual sales by the mid-2030s. That reassurance drove the stock up more than 10% in the following four weeks. However, investors note that only 20% of that projection is tied to assets already in Phase II or later trials. The balance relies on preclinical programs, making the long-range target highly speculative. Meanwhile, R&D spending is slated to rise by 12% this year, squeezing free cash flow and limiting near-term capital returns.

Keytruda accounts for just over half of Merck’s pharmaceutical revenue, but its quarterly growth has decelerated from over 20% year-over-year at its peak to roughly 5% in Q3. Softening uptake in lung and melanoma indications has put pressure on Merck’s top line, and investors will scrutinize Q4 guidance for signs of a renewed acceleration. Management has signaled that Q4 pricing dynamics and patient enrollment in combination trials could swing global Keytruda sales by as much as $1 billion, making the upcoming earnings release a critical catalyst for the stock.