Is Merck Stock a Bargain Buy?

Core Viewpoint - Merck is facing challenges with its leading drug Keytruda due to future patent losses, yet the company is experiencing revenue growth and exploring new opportunities for expansion [1][9]. Financial Performance - In the last quarter of 2024, Merck reported a 9% revenue growth, reaching $15.6 billion, with Keytruda contributing$7.8 billion and achieving an organic growth rate of 21% [2]. - Keytruda accounted for 50% of Merck's sales last quarter, highlighting its significant role in the company's revenue [3]. Product Pipeline and Future Potential - Merck is developing a subcutaneous version of Keytruda, which could extend patent protection until 2040, potentially mitigating revenue loss from the original drug [3]. - The company has other promising products, including Gardasil, which could generate $11 billion by 2030, despite recent underwhelming demand [6]. - Winrevair, approved for pulmonary arterial hypertension, is projected to generate$6 billion by 2029, with a peak potential of $11 billion, indicating strong future growth prospects [7]. - Merck has secured rights to an experimental weight loss drug, which could tap into a massive market projected to exceed$100 billion, representing a long-term growth opportunity [8]. Investment Consideration - Merck's stock is currently trading at a modest 14 times its trailing earnings, suggesting a good margin of safety for investors [10]. - Despite concerns surrounding Keytruda and Gardasil, management's proactive strategies and the promising product pipeline may present a compelling investment opportunity [9][10].