Merck & Co., Inc. (MRK): One of the Worst Blue Chip Stocks to Buy

We recently published a list of 10 Worst Blue Chip Stocks to Buy. In this article, we are going to take a look at where Merck & Co., Inc. (NYSE:MRK) stands against other worst blue chip stocks to buy.

As per Niamh Brodie-Machura, Co-Chief Investment Officer at Fidelity International, the effect of tariffs is expected to shift lower as and when the deals are made, supply chains adapt, and there is some adjustment in consumption patterns with lower tariffed goods witnessing relatively increased demand. However, there continues to be a period of increased volatility, and investors who plan to add risk should be careful. The environment is more of an opportunity to better position portfolios for resilience amidst uncertainty.

Market Rotation and Opportunity Areas

Contrary to expectations, BlackRock, in its release dated April 23, highlighted that international equities outperformed the US equities by 11% in 2025. The US growth stocks fell by 10%, and US value stocks increased by 2%. This transition demonstrates a significant market rotation throughout geography and style as value stocks continue to gain favor over growth stocks. Within the US market, value equities, mainly in defensive sectors such as healthcare, have been performing well, says the asset manager.

BlackRock also added that the narrowing of the earnings gap and the industry’s attractive characteristics, like innovation and the growth of aging populations, have been fueling the performance. Notably, active management strategies are advantageous when it comes to navigating the fluctuating markets.

READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.

What Should Investors Do?

BlackRock believes that the US large-cap value equities are the only major US index having positive returns YTD through March 31. Among the value equities, its investors are spotting opportunities in defensive sectors. In the current fast-moving political environment, primarily new trade policies, value equities can possess an additional tailwind. This stems from their ability to fetch a greater share of revenue from the US.

Elsewhere, if tariff discussions continue longer than expected or the average tariff rates differ from the current expectations, it is important to make portfolio changes accordingly, says Fiduciary Trust (a privately held wealth management firm). Notably, the capex spending on AI is expected to remain strong, and AI will likely fuel long-term productivity. The firm also opines that changes will be made to bank capital ratio rules, enabling them to enhance lending and/or increase stock buybacks. Both of these measures can improve earnings.

Our Methodology

To list the 10 Worst Blue Chip Stocks to Buy, we scanned through the holdings of SPDR® S&P 500® ETF Trust and chose the ones that declined between 15%-30% on a YTD basis. After getting an extended list of stocks, we selected the ones popular among hedge funds. Finally, the stocks were ranked in ascending order of their hedge fund holdings, as of Q4 2024.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Merck & Co., Inc. (NYSE:MRK)

Number of Hedge Fund Holders: 91

% Decline on a YTD Basis: ~23.3%

Merck & Co., Inc. (NYSE:MRK) is a leading global healthcare company. Bank of America Securities analyst Tim Anderson reiterated a “Buy” rating on the company’s stock, setting a price objective of $99.00. The analyst’s rating is backed by factors demonstrating the company’s growth potential and undervaluation. Despite the minor impacts from tariffs and foreign exchange in Q1 2025, the analyst believes that overall financial performance is robust. Also, Anderson opines that Merck & Co., Inc. (NYSE:MRK)’s stock remains undervalued given the growth prospects and strong pipeline. The company has made healthy progress to start the year, with higher contributions from its newer commercialized medicines and vaccines and continued advancement of the pipeline.

KEYTRUDA sales saw an increase of 6% YoY (excluding the impact of foreign exchange) in Q1 2025. The growth was aided by higher global uptake in earlier-stage indications, which include triple-negative breast cancer, renal cell carcinoma, and non-small cell lung cancer, and continued robust global demand from metastatic indications, which include increased uptake in bladder, endometrial, and microsatellite instability-high (MSI-H) cancers, partially mitigated by the timing of wholesaler purchases in the US. Overall, Merck & Co., Inc. (NYSE:MRK)’s emphasis on oncology, vaccines, and emerging therapeutic areas places it well to capitalize on increasing healthcare needs.

GreensKeeper Asset Management, an investment management company, released its Q3 2024 investor letter. Here is what the fund said:

“Merck & Co., Inc. (NYSE:MRK) was our second-largest detractor this quarter, declining -8.3%. MRK’s leading HPV vaccine, GARDASIL 9, faced challenges internationally due to inventory buildup within its Chinese distributor, which is expected to reduce shipments for the remainder of 2024. Despite this short-term impact, the long-term outlook for GARDASIL 9 remains promising. Meanwhile, the company’s $27 billion Keytruda cancer juggernaut continues to grow at a healthy clip, powering earnings growth.”

Overall, MRK ranks 3rd on our list of worst blue chip stocks to buy. While we acknowledge the potential of MRK as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for a deeply undervalued AI stock that is more promising than MRK but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article is originally published at Insider Monkey.