Merck Falls 9% in 3 Months: Buy, Hold or Sell the Stock?

Core Insights - Merck is facing significant challenges, including declining sales of its HPV vaccine, Gardasil, and diabetes drug, Januvia, alongside the impending loss of exclusivity for its cancer drug, Keytruda [1][2][7] - The company's stock has underperformed, losing 15.3% over the past year compared to a 3.9% decline in the industry [1][13] - Merck's reliance on Keytruda, which accounts for approximately 50% of its pharmaceutical sales, raises concerns about future growth, especially with patent expiration expected in 2028 [4][7] Sales and Financial Performance - Merck's stock has declined 8.8% in the last three months, influenced by broader industry pressures and the appointment of Robert F. Kennedy Jr. as the next HHS secretary [2][3] - The company reported disappointing third-quarter sales and profits, leading to guidance cuts and pipeline setbacks [3] - Merck's shares are trading below their 200-day moving average, indicating weak market performance [13] Key Products and Pipeline - Keytruda remains Merck's most significant asset, with strong sales growth driven by its use in early-stage non-small cell lung cancer [4][5] - The company is exploring innovative combinations and new formulations for Keytruda to extend its market presence [6][10] - Merck's pipeline has expanded significantly, with potential new products like the 21-valent pneumococcal conjugate vaccine, Capvaxive, and the pulmonary arterial hypertension drug, Winrevair, expected to contribute to future revenues [10][11] Market Challenges - Sales of Gardasil are declining in China due to reduced shipments, although the vaccine remains strong in other regions [12] - Competitive pressures are anticipated for Keytruda, particularly from emerging therapies like Summit Therapeutics' ivonescimab [8] - The overall drug and biotech sector has faced downturns, complicating investor sentiment regarding Merck's stock [3][21] Strategic Outlook - Merck is expected to achieve 6% to 7% revenue growth in 2025, driven by Keytruda and new product launches, despite challenges from declining Gardasil sales in China [21] - The company has a robust cash position of $14.6 billion, which could be utilized for acquisitions to bolster its R&D pipeline [20] - Long-term investors may find value in Merck's stock, while short-term investors might consider selling due to the current earnings growth outlook [22]