What Are Merck Stock Investors Overlooking

If you own Merck (MRK) stock, the number to watch is the sales of one cancer drug family. KEYTRUDA family sales were $8.4 billion in the second quarter of 2026. That was about half of Merck's $16.6 billion in quarterly revenue. Management now expects KEYTRUDA's U.S. growth to moderate, raising questions about whether the stock's recent run has fully priced in the transition.

Is KEYTRUDA Near Peak Use In The U.S.?

Management says yes, in several of KEYTRUDA's main uses. Merck expects slower U.S. growth because KEYTRUDA is close to reaching all the patients it can in those uses. Management gave that reason on its second-quarter 2026 call.

The drug family still grew 4% in that quarter. The gains came from more use in earlier-stage cancers and steady demand in cancers that have spread.

Rivals are also preparing copies of the drug. On September 3, 2026, India's Cipla said its U.S. unit had partnered with China's Qilu Pharmaceutical. The deal licenses a biosimilar, meaning a close copy of KEYTRUDA, for the U.S. market.

A slower KEYTRUDA would matter less if the rest of Merck grew quickly. So the next question is how fast Merck as a whole has been growing.

Merck Trails The S&P 500 On Growth, But Mildly

Merck's revenue grew 4.5% a year over the last three years, against 8.7% over five. The S&P 500 companies grew revenue 5.8% a year over three years. So Merck trails the index, but only mildly.

KEYTRUDA is about half of Merck's sales. So each point of KEYTRUDA growth adds about half a point to Merck's total growth. If KEYTRUDA slows, Merck's total growth slows too, unless other drugs make up the gap.

For 2026, management raised its revenue forecast to $66.3 billion to $67.3 billion. That would be growth of 2% to 4%, below the three-year pace. Growth below that pace raises a question for the stock: how much is it counting on Merck's newer drugs?

Is Merck Stock Counting On Its New Drugs?

Merck's share price likely assumes a lot from its newer drugs. The stock returned 92% over the past year, including dividends, against 18.0% for the S&P 500.

The price-to-sales ratio compares a company's market value with its yearly revenue. Merck trades at 5.5 times sales, against 3.1 times for the S&P 500. That ratio is in the top tenth of Merck's range over the past decade. With 2026 sales expected to grow only 2% to 4%, that premium likely rests on growth beyond KEYTRUDA.

Merck's newer drugs are the main reason the worry could be overdone. WINREVAIR, a drug for pulmonary arterial hypertension, sold $588 million in the second quarter, up 75%. WINREVAIR's sales are about 7% of KEYTRUDA family sales of $8.4 billion in the same quarter. Management also calls sac-TMT, a newer cancer drug, a cornerstone drug in its class. Beyond those, its partnered individualized cancer vaccine with Moderna has posted positive Phase 3 results, giving investors another major pillar to count on.

Management called the years after KEYTRUDA begins losing patent exclusivity in 2028 'more of a hill than a cliff' on its second-quarter call. Exclusivity ends when rivals may sell copies of the drug. Management expects a shallow dip, then a fast return to growth.

For a holder, the KEYTRUDA worry is real but measured. Merck hosts investors at a cancer conference in Madrid on October 26. Clear plans there for Merck's newer cancer drugs would ease the worry. A vague update would leave KEYTRUDA's sales, and their expected U.S. slowdown, as the number that matters most.

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