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Rahway, New Jersey-based Merck & Co., Inc. (MRK) functions as a healthcare company. Valued at $252.4 billion by market cap, the company delivers health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products, which it markets directly and through its joint ventures.
Shares of this pharmaceutical giant have considerably underperformed the broader market over the past year. MRK has declined 21.1% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 20.9%. In 2025, MRK stock is up marginally, compared to the SPX’s 1.9% rise on a YTD basis.
Narrowing the focus, MRK’s underperformance is apparent compared to the iShares U.S. Pharmaceuticals ETF (IHE). The exchange-traded fund has gained about 7.6% over the past year. Moreover, the ETF’s 5.3% gains on a YTD basis outshine the stock’s marginal returns over the same time frame.
MRK's underperformance stems from declining demand for its HPV vaccine Gardasil in China, pricing pressures in the U.S., pipeline setbacks, and generic competition affecting its diabetes franchise (Januvia/Janumet) globally. Growing concerns regarding Merck's non-oncology growth ahead of Keytruda's 2028 patent loss have also impacted its performance. However, the growing competition is pushing the company to strengthen its product pipeline.
Today, on Feb. 4, MRK reported its Q4 results. Its adjusted EPS of $1.72 surpassed Wall Street expectations of $1.69. The company’s revenue was $15.62 billion, beating Wall Street forecasts of $15.55 billion. For fiscal 2025, MRK expects full-year adjusted EPS to be between $8.88 and $9.03, and expects revenue to be between $64.1 billion and $65.6 billion.
For fiscal 2024, ended in December 2024, analysts expected MRK’s EPS to grow 404.6% to $7.62 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 25 analysts covering MRK stock, the consensus is a “Strong Buy.” That’s based on 18 “Strong Buy” ratings, and seven “Holds.”
This configuration is less bullish than a month ago, with 19 analysts suggesting a “Strong Buy.”
On Jan. 30, Leerink Partners analyst Daina Graybosch maintained a “Buy” rating on MRK with a price target of $118, implying a potential upside of 18.2% from current levels.
The mean price target of $125.95 represents a 26.2% premium to MRK’s current price levels. The Street-high price target of $168 suggests an ambitious upside potential of 68.4%.
