Moderna (MRNA) shares are paring back some of their recent gains on Thursday morning – but a Morgan Stanley analyst believes Merck (MRK) stock remains a buy following blockbuster cancer drug trial results.
A recent late-stage clinical trial showcased a combination therapy comprising MRNA’s intismeran autogene and MRK’s renowned Keytruda as effective in high-risk patients with melanoma.
And the landmark top-line results position Merck shares for a rally to $179 in the coming months, analyst Terence Flynn told clients in a research note on August 20th.
Morgan Stanley’s bullish call is significant given MRK is already up some 45% versus the start of this year (2026).
Flynn’s bullish view on Merck’s stock
Despite anxiety around Keytruda’s imminent 2028 patent expiration, Morgan Stanley argues that Merck’s robust clinical pipeline provides more than enough fuel to maintain long-term momentum.
Upgrading the pharmaceutical giant to Overweight, analyst Terence Flynn argued that emerging therapies – such as the promising oncology candidates intismeran autogene and sac-TMT, along with tulisokibart for inflammatory bowel disease – will smoothly bridge the revenue gap.
As successful trials de-risk these advanced treatments, he believes significant multiple expansion lies ahead for MRK shares.
Combined with strategic co-formulations designed to extend Keytruda’s market lifecycle, Merck is uniquely positioned to deliver sustainable growth well past its primary exclusivity window – he added.
Merck looks well-positioned for its next chapter
Merck shares impressive 45% rally this year is only the beginning – according to Terence Flynn.
A major pillar of his upbeat outlook is Keytruda’s extraordinary cash-flow generation, bringing in over $16 billion in the first half of 2026 alone, which gives the firm immense financial flexibility to execute its next chapter.
As new products hit the market, MRK will likely remain “attractive” – especially since the NYSE-listed firm also currently pays a healthy dividend yield of 2.27%.
Note that the recent rally pushed Merck above its 20-day moving average (MA) as well, indicating the bullish momentum could sustain in the near-term.
What’s the consensus rating on MRK shares?
Beyond Morgan Stanley’s upgrade, institutional sentiment around MRK stock remains positive as Wall Street reassesses the firm’s post-2028 trajectory.
Consensus among major brokerages leans heavily toward a “Buy” or “Overweight” rating – and from a technical standpoint, Merck’s break above its 20-day MA highlights strong buying pressure on heavy volume.
While near-term consolidation is possible given the company’s impressive year-to-date surge, the combination of solid technical momentum and fundamental de-risking suggests institutional buyers are actively positioning for further upside.
Note that Merck is currently trading at a price-to-sales (P/S) multiple of less than 6x, which signals a major discount to its historical average.
Paired with a resilient cash flow profile, a steadily growing dividend, and balance sheet flexibility, it’s well-positioned to reward patient capital as its next generation of oncology and immunology therapies comes to fruition.
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