Merck & Co., Inc. (NYSE:MRK), a global leader in healthcare and pharmaceuticals, has made a name for itself with breakthrough products in oncology, vaccines, and other critical health areas. The company recently released its fourth-quarter and full-year earnings for 2024, revealing strong results. However, Merck stock experienced a drop of 9% due to a cautious outlook for 2025, which disappointed investors. Despite the dip, analysts predict significant potential for Merck stock, forecasting a possible 92% upside in 2025. But should you buy now, or wait for a better entry point?

Merck’s Impressive Q4 Performance

Merck’s business model revolves around discovering and developing cutting-edge drugs and vaccines, investing heavily in research and development (R&D). In 2024, Merck’s R&D expenditure amounted to $17.9 billion, underscoring the company’s commitment to innovation and its long-term growth strategy. The company has made a significant impact in oncology, vaccines, infectious diseases, and cardiology.

One of Merck’s flagship products is Keytruda, an immunotherapy treatment used for various cancers. In 2024, Keytruda’s sales surged 18%, reaching $29.5 billion, making it Merck’s primary revenue driver. Merck also reported global revenue of $15.6 billion for Q4, a 7% increase year-over-year, exceeding Wall Street’s expectations. Total sales for the year rose by 7% to $64.2 billion, with adjusted earnings per share increasing significantly from $1.51 in 2023 to $7.65 in 2024.

Additionally, Merck’s Gardasil/Gardasil 9 vaccine continues to be a major success, generating $8.6 billion in sales in 2024. The vaccine protects against human papillomavirus (HPV), which is linked to cervical cancer. However, despite these strong financials, Merck’s stock took a hit due to a less-than-expected sales forecast for 2025. The company revised its sales outlook for the year, predicting a range between $64.1 billion and $65.6 billion, lower than analysts’ expectations.

Merck’s Strategic Investments and Partnerships

Merck’s future growth prospects are bolstered by its investment in next-generation therapies, particularly in immunology and mRNA technology. In March 2024, Merck announced its collaboration with Moderna (NASDAQ:MRNA) to develop mRNA-based cancer vaccines. Together, the companies are advancing Phase 3 clinical trials for the V940 cancer vaccine, an individualized neoantigen therapy. These trials, which combine V940 with Keytruda, focus on treating lung cancer and melanoma, marking a promising avenue for growth.

Moreover, Merck’s decision to temporarily pause shipments of Gardasil/Gardasil 9 to China could impact short-term revenue. However, the company remains optimistic about the long-term potential in the Chinese market, given the high unmet demand for HPV vaccinations. Merck’s ability to navigate short-term challenges while capitalizing on long-term growth opportunities is key to its future success.

Analysts Are Bullish on Merck Stock

Despite the short-term setbacks, Wall Street remains highly bullish on Merck stock. Among the 25 analysts covering the stock, 18 have assigned a “Strong Buy” rating, with the remaining seven recommending a “Hold.” The consensus target price for Merck stock is $122.55, implying an upside of 40.4% from its current price. Furthermore, some analysts have a Street-high target of $181.25, predicting a remarkable 92% potential gain for the stock in the next year.

Merck’s strong pipeline, robust financial performance, and strategic partnerships have made it a favorite among analysts. The company’s investments in cancer treatments, vaccines, and mRNA technology are expected to drive future growth, positioning Merck as a leader in the healthcare space.

Is Merck Stock a Buy in 2025?

With a 3.71% dividend yield—more than double the healthcare sector average—Merck offers income potential alongside capital appreciation. Although its stock price has dipped recently, the long-term growth outlook remains strong, especially with the company’s continued focus on R&D and strategic collaborations.

For dividend investors, Merck provides a solid yield, while those seeking growth may find the stock appealing due to its innovations in oncology and mRNA technology. If you’re considering investing in healthcare stocks in 2025, Merck’s undervalued position and strong growth prospects make it an attractive option.

Featured Image: Megapixl

Please See Disclaimer