Why Are Merck Shares Hitting All-Time-Highs?

Merck shares (NYSE: MRK) are marginally lower this morning, giving back 1.38% of yesterday’s 12.6% gain to sit at $150.10. Wednesday’s price action saw Merck’s share price make a new ATH at $153.50, after the company and Moderna announced that a personalized cancer ‘vaccine’ combined with Merck’s Keytruda immunotherapy met its primary and secondary endpoints in a large Phase 3 trial in resected Stage IIB-IV melanoma.

The combination cut the rate of disease recurrence and prevented tumour spread to new areas of the body, results that the companies described as a corporate-level milestone. Moderna’s shares more than doubled on the news, but the impact for Merck is arguably just as significant, albeit not in the stock. The Moderna share price is trading ~10% lower in the pre-market, as investors begin to work through what the results could mean to the bottom line.

Whilst the results are a fantastic breakthrough, the potential addressable market is so far limited to those people who already have skin cancer. There would likely need to be an expanded range of uses in order to have the impact on earnings that the initial share price pop would suggest.

For months, the central debate around Merck has been whether the looming loss of exclusivity on Keytruda, its blockbuster cancer immunotherapy, represents a manageable hill or a devastating cliff for earnings. This latest melanoma result adds meaningful weight to the hill argument. If Keytruda can anchor a new generation of personalized vaccine combinations, the drug’s commercial ecosystem extends well beyond its patent expiration, potentially sustaining premium pricing and volume even as biosimilar versions of the core molecule eventually arrive.

In the second quarter, Keytruda franchise sales reached $8.4 billion, up 4% year over year, while WINREVAIR, Merck’s pulmonary arterial hypertension treatment, hit $588 million, a 75% jump that underscores the company’s push to diversify beyond oncology. Chief executive Rob Davis has repeatedly framed a $70 billion new-product framework as the vehicle for de-risking the Keytruda cliff, and recent readouts on SAC-TMT and Tulasocobar have been cited as early evidence that the framework is working faster than expected. The launch of Lipfendra, the first oral PCSK9 inhibitor, and an anticipated approval for IDXD in the second half of this year add further texture to that story.

Merck’s balance sheet tells a company in aggressive acquisition mode. The first half of 2026 produced a net loss of $5.6 billion, driven by $13.8 billion in R&D asset acquisition charges, including the $6.8 billion purchase of Terns Pharmaceuticals and the Cidara deal. Those charges have compressed reported earnings sharply, pushing the trailing price-to-earnings ratio to levels that look alarming in isolation. But operating cash flow of $9.3 billion in the first half, nearly double the year-ago figure, signals that the underlying business is generating real cash even as accounting charges distort the income statement.

Price Targets

Looking at the technical setup, and Merck’s price has been in a well-structured uptrend, with the 50-day moving average sitting above the 200-day average and the shorter-term 20-day exponential average leading both. The ADX trend-strength reading of 24 indicates a building rather than exhausted trend, with the 79.78% gain over the past year narking MRK shares out as a longer term outperformer.

Off the back of the move, Merck’s share price is now trading ~8% above the average analyst target, and the Keytruda loss-of-exclusivity timeline has not changed. Considering the stock has already run up substantially, there is plenty baked in at these fresh highs.