Why This Beaten-Down Stock Is a Buy in 2025 and Beyond

Core Viewpoint - Merck is facing significant challenges due to the impending patent cliff for its leading cancer drug, Keytruda, but it remains a strong investment for long-term holders [2][3]. Group 1: Keytruda's Market Position - Keytruda generates over $20 billion in annual sales and has over 30 indications in the U.S. across various cancer types, which is expected to sustain revenue growth until its patent loss in 2028 [3][4]. - The competition from ivonescimab and BioNTech's PM8002 is anticipated to take time to develop and gain approval, allowing Keytruda's sales to continue growing until at least 2028 [5][6]. Group 2: Post-Keytruda Strategies - Merck is developing a subcutaneous version of Keytruda, which has shown positive phase 3 results, indicating it will continue to compete effectively in the market [6][7]. - The company is also exploring new products, including a partnership with LaNova Medicines for LM-299 and a deal with Hansoh Pharma for an oral GLP-1 medicine, indicating a proactive approach to diversify its portfolio [8][9]. Group 3: Financial Health and Dividend - Merck has a strong history of revenue growth, with an 80% increase in dividends over the past decade, and a current forward yield of approximately 3.4%, significantly higher than the S&P 500 average [12][13]. - The company’s robust pipeline of over 90 programs in mid or late-stage trials suggests potential for future revenue generation beyond Keytruda [10].