MRK Down 21% YTD: Should You Buy, Hold or Sell the Stock?

Core Viewpoint - Merck's stock has underperformed compared to the industry, sector, and S&P 500, with a year-to-date decline of 21.3% against a 4.5% decrease for the industry [1][3][4] Group 1: Stock Performance and Market Conditions - Broader macroeconomic uncertainty and tariff-related tensions have contributed to Merck's stock decline [4][5] - The stock is trading below its 50-day and 200-day moving averages, indicating weak performance [1] Group 2: Key Products and Revenue Drivers - Keytruda, a PD-L1 inhibitor, is Merck's biggest strength, accounting for around 50% of pharmaceutical sales and driving steady revenue growth [7][8] - Merck is developing innovative combinations and a personalized mRNA therapeutic cancer vaccine in partnership with Moderna to enhance Keytruda's growth [9][10] Group 3: Pipeline and Strategic Initiatives - Merck's phase III pipeline has nearly tripled since 2021, with plans to launch around 20 new vaccines and drugs, including Capvaxive and Winrevair, which have significant revenue potential [12][28] - The company is also exploring the obesity market with an investigational oral GLP-1 receptor agonist [14] Group 4: Challenges and Competitive Landscape - Concerns exist regarding Merck's heavy reliance on Keytruda, especially with its patent expiration in 2028 and increasing competition from drugs like ivonescimab [15][16] - Sales of Gardasil are declining in China due to weak demand, leading to a temporary halt in shipments [17][18] Group 5: Valuation and Market Outlook - Merck's shares trade at a price/earnings ratio of 8.39, lower than the industry average of 14.51, indicating attractive valuation [20] - Despite challenges, new products are witnessing strong launches, and the company has a promising pipeline, suggesting potential for long-term revenue growth [28][30]