Will Keytruda Continue to Aid Merck's Top Line in Q4 Earnings?

A meaningful portion of Merck’s MRK revenues comes from its oncology franchise anchored by its blockbuster PD-L1 inhibitor, Keytruda. The drug contributes over half of the company’s pharmaceutical revenues. Keytruda has played an instrumental role in driving Merck’s steady revenue growth over the past few years, with sales of $23.3 billion in the first nine months of 2025 representing an 8% year-over-year increase.

Though Keytruda sales increased 8% year over year during the third quarter of 2025, they were weaker than expected. Per management, Keytruda's soft sales in the third quarter were due to unfavorable channel movements and not due to a drop in underlying demand. Building on this optimism, we expect investors to focus on the sales performance of Keytruda when Merck reports its fourth-quarter and full-year 2025 results on Feb. 3.

Keytruda sales are likely to have gained from rapid uptake across earlier-stage indications and strong momentum in metastatic indications in the fourth quarter. The company expects continued growth from Keytruda, particularly in the early lung cancer indication.

The Zacks Consensus Estimate for Keytruda’s fourth-quarter sales stands at $8.27 billion, while our model estimate is $8.21 billion.

In 2026, Merck expects Keytruda to grow and expand into new indications and markets globally continuously, as the FDA decision for ovarian cancer, as well as other cancer indications, draws closer. Keytruda is not approved to treat ovarian cancer.

Also, the recent FDA approval for the subcutaneous (SC) formulation of Keytruda, known as Keytruda Qlex, which improves patient convenience, is likely to aid sales further.

PD-L1 Inhibitors Competing With Keytruda

Keytruda faces competition from other PD-L1 inhibitors, including Bristol Myers’ BMY Opdivo, Roche’s RHHBY Tecentriq and AstraZeneca’s AZN Imfinzi.

BMY’s Opdivo, like Keytruda, is approved across multiple cancer types, including lung, melanoma and kidney cancers. Bristol Myers recorded $7.35 billion in Opdivo sales during the first nine months of 2025, up 8% year over year.

Tecentriq is Roche’s leading immuno-oncology drug approved for multiple cancer indications. RHHBY recorded CHF 2.61 billion in Tecentriq sales in the first nine months of 2025.

AZN’s Imfinzi generated sales of $4.32 billion in the first nine months of 2025, up 25%, driven by demand growth in lung and liver cancer indications. Imfinzi has strategically expanded its use across multiple cancer indications, strengthening AstraZeneca’s oncology portfolio.

MRK's Price Performance, Valuation and Estimates

Over the past six months, shares of Merck have rallied 32.8%, compared with the industry’s 23.2% rise. The stock has also outperformed the sector and the S&P 500 during the same time frame, as seen in the chart below.

From a valuation standpoint, Merck appears attractive relative to the industry. Going by the price/earnings ratio, the company’s shares currently trade at 12.83 forward earnings, lower than 17.81 for the industry but higher than its 5-year mean of 12.48.

The Zacks Consensus Estimate for 2025 earnings per share has remained stable at $8.97, while the same for 2026 has decreased from $9.33 to $7.94 over the past 60 days.

MRK's Zacks Rank

Merck currently has a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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