Merck (MRK) Valuation in Focus After Groundbreaking KEYTRUDA Trial Results for Ovarian Cancer

Merck (MRK) revealed that its Phase 3 KEYNOTE-B96 trial met a key secondary endpoint, as KEYTRUDA with chemotherapy improved overall survival in platinum-resistant recurrent ovarian cancer. This is the first time an immune checkpoint inhibitor regimen has achieved this result.

See our latest analysis for Merck.

Merck’s latest clinical milestone comes on the back of a busy month, with new data rolling out from multiple late-stage cancer and HIV trials, as well as high-profile presentations at major medical conferences. Still, the company’s stock hasn’t reflected the same momentum, with a year-to-date share price return of -14.5% and a tough 1-year total shareholder return of -19.1%. Long term, however, shareholders have seen solid gains. Merck’s 5-year total return sits at 30.5%, suggesting that while enthusiasm is muted lately, the case for steady value remains intact.

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With the stock trading well below analyst targets despite Merck’s recent scientific successes, investors are left wondering whether this is an overlooked opportunity or if the market is already accounting for future growth.

Most Popular Narrative: 17.1% Undervalued

Merck’s most followed valuation narrative pegs fair value at $102.33, well above the last close of $84.79. This creates a compelling contrast between investor skepticism and what is projected as Merck’s future earning power.

“With its acquisition and licensing strategy, Merck has nearly tripled its late-phase pipeline since 2021, which is expected to have a potential commercial opportunity of over $50 billion by the mid-2030s, driving earnings growth. The ongoing strong launches of key new products, such as WINREVAIR and CAPVAXIVE, are positively impacting revenues and are expected to support further growth in the coming years.”

Read the complete narrative.

Want to know how blockbuster launches and a pipeline surge could rewrite Merck’s financial future? This narrative's math relies on a subtle but ambitious combination of margin expansion and revenue assumptions. Which number reveals the justification for a price target that is higher than the current market view? Find out what really powers this valuation.

Result: Fair Value of $102.33 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, declining GARDASIL sales in key markets and potential new pharmaceutical tariffs could present challenges to the optimistic outlook for Merck’s future growth.

Find out about the key risks to this Merck narrative.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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