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MRK Merck & Co.

pharma · valued with sonnet high conviction · 2026-07-21

HOLD
wonderful · 85 ▟ narrow moat circle of competence: edge ✓ would own for a decade trend up · +14.8% vs 200-DMA
Owner-earnings value$100.02
Price$124.40
Margin of safety -19.6%

Merck’s diversified drug portfolio and strong cash flow support steady growth, but patent cliffs cap upside.

The business

Merck develops, manufactures, and markets prescription medicines, vaccines, and animal health products worldwide, earning revenue from sales and royalties of its drug portfolio.

Quality gate · 85/100

Returns on capital 26.4/30
Consistency 16.6/22
Margins / pricing power 15.9/16
Balance sheet 10.4/16
Cash conversion 10/10
Capital allocation 5.3/6
Median ROIC19.4%
Gross margin73.9%
Net debt / EBITDA1.8x
FCF conversion108%
Share count / yr-0.8%
Profitable years4/4

Moat & management

Moat ▟ narrow moat
Sourceintangible
Trajectorystable
Managementexcellent

Patents, regulatory approvals, and a strong brand protect individual products, while a broad pipeline and global scale provide some cushion, but each drug faces eventual expiry.

Consistently returns cash to shareholders via dividends and buybacks, maintains a disciplined R&D spend, and pursues selective acquisitions.

Owner-earnings inputs

Owner earnings (TTM)11.41B
Owner-earnings yield3.7%
Free-cash-flow yield4.6%
Growth used (normalized)7.0%
Market-implied growth (reverse DCF)10.8%
Terminal growth3.0%
Discount rate (hurdle)9.0%

Projected owner earnings

YrOwner earningsGrowthPV
112.21B 7.0%11.20B
213.03B 6.7%10.97B
313.87B 6.4%10.71B
414.72B 6.1%10.43B
515.58B 5.9%10.13B
616.45B 5.6%9.81B
717.32B 5.3%9.47B
818.18B 5.0%9.13B
919.04B 4.7%8.77B
1019.89B 4.4%8.40B
1120.71B 4.1%8.03B
1221.51B 3.9%7.65B
1322.28B 3.6%7.27B
1423.01B 3.3%6.89B
1523.70B 3.0%6.51B

Key risks

  • Keytruda patent cliff
  • Competitive pressure on new drugs
  • Regulatory and pricing headwinds
  • R&D pipeline failure

Catalysts

  • Approval of next‑generation oncology agents
  • Successful vaccine launches
  • Strategic acquisitions to broaden pipeline

Recent news

score · 8 articles

  • Merck’s Keytruda Faces a Patent Cliff. These New Cancer Drugs Could Take Over.
  • Merck (MRK) Declines More Than Market: Some Information for Investors
  • Tempus AI Scoops Up Personalis For $1.5 Billion; But Shares Dive
  • Reading Between The Lines Of JNJ Stock's Latest Call
  • Eli Lilly Stock And The Price Of Confidence
  • Merck (MRK) Wins FDA Approval For First Oral PCSK9 Cholesterol Drug
  • The Real Question Buried Inside Merck Stock's Premium Price
  • Merck Reportedly Goes To Bat In Takeover Battle. But Genomics Stock Reverses.

⚠ maintenance capex ≈ min(capex, D&A), capped at FCF · Price pays for ~11%/yr owner-earnings growth over 15y (reverse DCF); model credits 7%. · Rich vs our conservative value, but a quality business is not a short — stance is WAIT for a better price, not sell.

History

DateQualityPriceValueMoSRating
2026-10-28 82 $141.82 $41.93 -70.4% HOLD
2026-10-27 82 $140.61 $52.51 -62.7% HOLD
2026-10-26 82 $145.27 $52.51 -63.9% HOLD
2026-10-23 82 $147.24 $52.51 -64.3% HOLD
2026-10-22 82 $149.88 $52.51 -65.0% HOLD
2026-10-21 82 $148.30 $52.51 -64.6% HOLD
2026-10-20 82 $143.63 $52.51 -63.4% HOLD
2026-10-19 82 $145.95 $52.51 -64.0% HOLD
2026-10-16 82 $145.19 $52.51 -63.8% HOLD
2026-10-15 82 $147.37 $52.51 -64.4% HOLD
2026-10-14 82 $141.98 $52.51 -63.0% HOLD
2026-10-13 82 $145.45 $52.51 -63.9% HOLD
2026-10-12 82 $145.60 $52.51 -63.9% HOLD
2026-10-09 82 $142.38 $52.51 -63.1% HOLD
2026-10-08 82 $142.79 $52.51 -63.2% HOLD
2026-10-07 82 $141.94 $52.51 -63.0% HOLD
2026-10-06 82 $139.54 $52.51 -62.4% HOLD
2026-10-05 82 $144.30 $52.51 -63.6% HOLD
2026-10-02 82 $143.81 $52.51 -63.5% HOLD
2026-10-01 82 $145.31 $52.51 -63.9% HOLD
2026-09-30 82 $149.28 $52.51 -64.8% HOLD
2026-09-29 82 $148.69 $52.51 -64.7% HOLD
2026-09-28 82 $148.78 $52.51 -64.7% HOLD
2026-09-25 82 $147.98 $52.51 -64.5% HOLD
2026-09-24 82 $148.08 $52.51 -64.5% HOLD
2026-09-23 82 $149.50 $52.51 -64.9% HOLD
2026-09-22 82 $149.50 $52.51 -64.9% HOLD
2026-09-21 82 $146.87 $52.51 -64.3% HOLD
2026-09-18 82 $147.15 $52.51 -64.3% HOLD
2026-09-17 82 $144.91 $52.51 -63.8% HOLD
2026-09-16 82 $143.79 $52.51 -63.5% HOLD
2026-09-15 82 $144.85 $52.51 -63.8% HOLD
2026-09-14 82 $143.93 $52.51 -63.5% HOLD
2026-09-11 82 $144.71 $52.51 -63.7% HOLD
2026-09-10 82 $147.53 $52.51 -64.4% HOLD
2026-09-09 82 $148.46 $52.51 -64.6% HOLD
2026-09-08 82 $150.33 $52.51 -65.1% HOLD
2026-09-07 82 $150.33 $52.51 -65.1% HOLD
2026-09-04 82 $152.34 $52.51 -65.5% HOLD
2026-09-03 82 $151.64 $52.51 -65.4% HOLD
2026-09-02 82 $149.86 $52.51 -65.0% HOLD
2026-09-01 82 $147.76 $52.51 -64.5% HOLD
2026-08-31 82 $148.35 $52.51 -64.6% HOLD
2026-08-28 82 $149.54 $52.51 -64.9% HOLD
2026-08-27 82 $153.10 $52.51 -65.7% HOLD
2026-08-26 82 $156.45 $52.51 -66.4% HOLD
2026-08-25 82 $150.66 $52.51 -65.1% HOLD
2026-08-24 82 $152.55 $52.51 -65.6% HOLD
2026-08-21 82 $148.99 $52.51 -64.8% HOLD
2026-08-20 85 $152.20 $100.02 -34.3% HOLD
2026-08-19 85 $135.17 $100.02 -26.0% HOLD
2026-08-18 85 $135.84 $100.02 -26.4% HOLD
2026-08-17 85 $135.84 $100.02 -26.4% HOLD
2026-08-14 85 $135.55 $100.02 -26.2% HOLD
2026-08-13 85 $132.92 $100.02 -24.8% HOLD
2026-08-12 85 $130.42 $100.02 -23.3% HOLD
2026-08-11 85 $130.92 $100.02 -23.6% HOLD
2026-08-10 85 $128.58 $100.02 -22.2% HOLD
2026-08-07 85 $128.37 $100.02 -22.1% HOLD
2026-08-06 85 $128.33 $100.02 -22.1% HOLD
2026-08-05 85 $128.00 $100.02 -21.9% HOLD
2026-08-04 85 $130.20 $100.02 -23.2% HOLD
2026-08-03 85 $130.20 $100.02 -23.2% HOLD
2026-07-31 85 $129.79 $100.02 -22.9% HOLD
2026-07-30 85 $130.36 $100.02 -23.3% HOLD
2026-07-29 85 $130.76 $100.02 -23.5% HOLD
2026-07-28 85 $130.76 $100.02 -23.5% HOLD
2026-07-27 85 $130.48 $100.02 -23.3% HOLD
2026-07-24 85 $130.48 $100.02 -23.3% HOLD
2026-07-23 85 $127.47 $100.02 -21.5% HOLD
2026-07-22 85 $126.26 $100.02 -20.8% HOLD
2026-07-21 85 $124.40 $100.02 -19.6% HOLD
2026-07-20 85 $127.50 $79.88 -37.4% HOLD
2026-07-17 85 $127.63 $79.88 -37.4% HOLD
2026-07-16 85 $123.61 $79.88 -35.4% HOLD
2026-07-15 85 $124.03 $79.88 -35.6% HOLD
2026-07-14 85 $124.03 $79.88 -35.6% HOLD
2026-07-13 85 $123.54 $79.88 -35.3% HOLD
2026-07-10 85 $125.07 $79.88 -36.1% HOLD
2026-07-09 85 $125.99 $79.88 -36.6% HOLD
2026-07-08 85 $128.86 $79.88 -38.0% HOLD
2026-07-07 85 $126.78 $79.88 -37.0% HOLD
2026-07-06 85 $129.56 $79.88 -38.3% HOLD
2026-07-03 85 $129.56 $79.88 -38.3% HOLD
2026-07-02 85 $125.37 $79.88 -36.3% HOLD
2026-06-25 85 $120.60 $79.72 -33.9% STRONG SELL
2026-06-23 85 $119.60 $79.72 -33.3% STRONG SELL