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Today's Featured News Merck Just Made a Big Bet on a New Cancer Growth Engine Reported by Jessica Mitacek. First Published: 3/31/2026. 
Key Points - Merck is set to acquire Terns Pharmaceutical for $6.7 billion, adding its promising leukemia treatment to its growing hematology and cancer pipeline.
- This is Merck’s third multi-billion dollar deal in a year, a bolt-on strategy projected to drive a $70 billion commercial opportunity by the mid-2030s.
- With an average five-year gross margin of 73% and 14 consecutive years of dividend increases, Merck remains a top-tier performer with a Moderate Buy rating.
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While the health care sector has struggled this year, that hasn't been the case for all of Big Pharma. Shares of New Jersey-based Merck & Co. (NYSE: MRK) have outperformed the sector and the broader market, rising more than 12%. After nearly five decades on Wall Street, Louis Navellier says a major currency shift is already underway - and the wealthiest Americans, including Musk, Zuckerberg, and Ellison, are quietly moving money out of dollars and into a different type of asset entirely. It's not bitcoin or any other crypto. Navellier has identified 7 companies he believes are positioned at the center of this trend - the last time he spotted a setup like this, Nvidia climbed as high as 10,000%. Watch Navellier's urgent briefing and get all 7 company names The drugmaker's stock recently got a boost on news that it would acquire Terns Pharmaceuticals—a move that will bolster its cancer-treatment pipeline and reinforce Merck's reputation as a top-tier serial acquirer. This kind of mergers and acquisitions (M&A) activity has helped Merck sustain steady growth and expand its market cap, which now exceeds $296 billion—behind only Eli Lilly (NYSE: LLY) and AbbVie (NYSE: ABBV), at roughly $830 billion and $370 billion, respectively. Merck's Terns Acquisition Is a Pivotal Oncology Play On March 25, Merck announced a deal to acquire Terns, a clinical-stage oncology company developing therapies that include TERN-701, an oral allosteric BCR–ABL1 inhibitor for chronic myeloid leukemia. According to the press release, Merck will acquire Terns for $53 per share in cash, implying an equity value of about $6.7 billion and further building the company's presence in hematology with a "potential best-in-class candidate" for certain patients with chronic myeloid leukemia. The definitive agreement marks Merck's third multi-billion-dollar acquisition in the past year. Although still in clinical stages, TERN-701 has shown promising activity, with "encouraging rates of molecular response and deep molecular response," including responses in patients with high disease burden who previously received multiple lines of therapy. M&A Activity Has Helped Support Merck's Earnings and Dividend Profile Merck's ability to execute deals like the Terns acquisition underscores its central role in the pharmaceutical industry and corresponds with a consistently strong earnings track record. The company has missed analyst estimates only once in the past 19 quarters, dating back to Q2 2021. When Merck reported Q4 2025 financials on Feb. 3, it posted earnings per share (EPS) of $2.04 versus expectations of $2.01, and revenue of $16.40 billion versus expectations of $16.19 billion. With a forward price-to-earnings multiple of 16.45, Merck's EPS is forecast to grow nearly 10% over the next year, from $9.01 to $9.90. In his earnings call, CEO Rob Davis attributed the company's steady growth to new product launches, progress in key clinical programs, and added scale in respiratory and infectious diseases from the Verona Pharma and Cidara Therapeutics acquisitions. "As a result of this progress, we now have line of sight to over $70 billion of potential commercial opportunity by the mid-2030s, $20 billion more than just a year ago and more than double consensus 2028 peak Keytruda revenue of $35 billion," Davis said. Beyond those revenue forecasts, the more important takeaway is the rapid scale Merck has achieved through its acquisition strategy. That M&A activity—in addition to the Terns deal—has become a hallmark for the company. The Verona Pharma and Cidara Therapeutics agreements, valued at $10 billion and $9.2 billion respectively, were followed by the Terns announcement, valued at $6.7 billion. Merck continues to pursue a bolt-on acquisition strategy to diversify its oncology, immunology, and infectious disease pipeline. Seamless integration of these biotech companies into its portfolio accelerates growth and expands Merck's market share while reducing hurdles as it enters new markets. As a result, the company has maintained a five-year average gross margin above 73%. Those high and expanding margins signal strong pricing power and operational efficiency, which help Merck sustain and grow its dividend, currently yielding 2.84% (about $3.40 per share annually). While dividends are common among mature health care companies—particularly large pharmaceutical firms and established managed care companies—Merck stands out. The company has increased its payout for 14 consecutive years and posts a five-year dividend growth rate of 5.75%. How Wall Street Feels About Merck Among the 18 analysts covering the stock, Merck has a consensus "Moderate Buy" rating, with 11 analysts assigning a Buy. With an average one-year price target of $127.13, Wall Street sees roughly 7% upside. Institutional ownership remains above average at more than 76%, with inflows of nearly $37 billion outpacing outflows of about $19 billion over the past 12 months. Current short interest of just 1.18% of the float—about 29 million of 2.47 billion shares outstanding—suggests limited bearish positioning. Merck has been in the green zone on TradeSmith's financial health indicator for more than six months, and the company scores higher than 93% of peers evaluated by MarketBeat, ranking 39th out of 858 stocks in the medical sector. |
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