ABBV or MRK: Which Stock Should Investors Place Their Bet on in 2025?

Core Insights - Merck (MRK) and AbbVie (ABBV) are leading pharmaceutical companies with strong positions in oncology and immunology, with AbbVie also involved in aesthetics, neuroscience, and eye care [1][2] - Both companies are experiencing steady sales and earnings growth, supported by strong pipelines with late-stage candidates [2] AbbVie Overview - AbbVie's largest segment is immunology, driven by therapies like Humira, Skyrizi, and Rinvoq, which together account for approximately half of its total revenues [2] - AbbVie has successfully mitigated the impact of Humira's loss of exclusivity by launching Skyrizi and Rinvoq, which generated combined sales of $11.6 billion in the first half of 2025 [3][4] - The oncology segment contributed $3.3 billion in revenues in the first half of 2025, while neuroscience drugs saw a 20.3% increase in sales to nearly $5 billion [5] - AbbVie has executed over 30 M&A transactions since early 2024 to enhance its early-stage pipeline [6] - As of June 30, 2025, AbbVie had $63.0 billion in long-term debt and $7.5 billion in short-term obligations, with a debt-to-capital ratio of 1.02 [8] Merck Overview - Merck has over six blockbuster drugs, with Keytruda being the primary revenue driver, contributing significantly to steady revenue growth [9][11] - Keytruda's sales rose around 7% in the first half of 2025, with expectations for continued growth, particularly in early-stage lung cancer [11][12] - Merck's Animal Health business is also a key contributor to revenue growth, with above-market growth [12] - Merck's phase III pipeline has nearly tripled since 2021, positioning the company to launch around 20 new vaccines and drugs in the coming years [13] - Merck's second-largest product, Gardasil, saw a 48% decline in sales in the first half of 2025, primarily due to weak performance in China [15][17] Financial Performance and Valuation - AbbVie's stock has risen 20.3% year-to-date, while Merck's stock has declined 14.8% [22] - AbbVie trades at a price/earnings ratio of 15.36, higher than Merck's 8.88 [24] - AbbVie's return on equity stands at 699.7%, significantly higher than Merck's 41.1% [29] - The Zacks Consensus Estimate for AbbVie's 2025 sales and EPS implies a year-over-year increase of 7.5% and 18.9%, respectively, while Merck's estimates imply a 1.2% increase in sales and a 16.7% increase in EPS [18][20] Growth Outlook - AbbVie is expected to return to mid-single-digit revenue growth in 2025, with a high single-digit CAGR through 2029, benefiting from no significant loss of exclusivity events for the rest of the decade [33] - Merck is anticipated to return to growth in the second half of 2025, driven by oncology drugs and new products, despite challenges from declining Gardasil sales [30]