RBC Capital Sees Merck (MRK) Returning to Growth Sooner Than Market Expects

Merck & Co., Inc. (NYSE:MRK) is included among the 14 Best Affordable Dividend Stocks to Buy According to Analysts.

On February 25, RBC Capital initiated coverage of Merck & Co., Inc. (NYSE:MRK) with an Outperform rating and a $142 price target. The firm believes investor interest in the stock could continue, supported by upcoming product launches and Phase 3 trial results that may lead to higher earnings estimates. The analyst also pointed to the company’s long-term outlook. While Keytruda is expected to lose exclusivity in late 2028, RBC described that period as “de-risking.” The firm said management’s track record gives it confidence that Merck can return to growth in the early 2030s. This view differs from broader market expectations, which assume Merck’s decline could last into the mid-2030s, according to the research note.

On February 23, Merck announced plans to reorganize its business into two separate divisions. One division will focus on its oncology portfolio, led by Keytruda. The other will include its non-oncology treatments. This move reflects the company’s effort to reduce its reliance on Keytruda and other older drugs as patents approach expiration. Merck has expanded its pipeline significantly in recent years. Since 2021, the company has tripled the number of programs in development. It also acquired Cidara Therapeutics and Verona Pharma last year in deals worth about $10 billion combined, strengthening its broader portfolio. Its shares were little changed in early trading following the announcement.

Merck has taken similar steps before. In 2021, the company spun off its women’s health and biosimilars business into a separate company, Organon. This latest restructuring does not include its animal health division.

Merck & Co., Inc. (NYSE:MRK) operates as a global healthcare company, developing and delivering prescription medicines, biologic therapies, vaccines, and animal health products.

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