Merck Stays Confident On M&A Despite Market Uncertainty: Analyst

Merck & Co. Inc‘s (NYSE:MRK) M&A efforts will continue.

That’s according to a Goldman Sachs analyst report, which details the company’s growth strategy. Analyst Asad Haider explained in a Friday note that Merck acknowledges that deal-making is getting more complex. However, management remains aggressive and committed to pursuing M&A, Haider adds.

While market conditions influence how they assess value, a gap persists between what buyers are willing to pay and sellers’ expectations. Despite this, Merck is confident deals will happen and has transactions in the pipeline.

M&A remains a key pillar of Merck's growth strategy, with potential deal sizes up to—and possibly beyond—$15 billion.

Goldman Sachs analysts maintain a buy rating. The firm adjusted the price target from $103 to $99 to reflect additional risk from recent ACIP developments and China inventory related to Gardasil on 2026 adjusted EPS.

The price adjustment comes as Merck releases first-quarter 2025 adjusted earnings of $2.22 per share. That’s up 7% year over year (+12% on constant currency), beating the consensus of $2.14.

The company said the outlook includes the impact of tariffs implemented to date by the U.S. government on imports from other countries, as well as the tariffs imposed by foreign governments on the U.S., the most significant of which relate to China.

Also Read: Merck Signs Nearly $500 Million Licensing Deal With Austria-Based Cyprumed For Tablet-Based Peptide Delivery

Quarterly sales came in at $15.53 billion, beating the consensus of $15.31 billion.

Tariffs will result in incremental costs of approximately $200 million, which will primarily be recorded in the cost of sales and negatively impact the gross margin.

Goldman Sachs said Friday that company management is working to improve its supply chain by strengthening its U.S. manufacturing presence. The company has already spent $12 billion since 2017 and plans to invest another $9 billion, with more spending expected.

The company also said it’s already adjusting its supply chain and inventory, and it’s now better prepared to handle any tariff-related disruptions in 2025.

Looking ahead, management noted that it has started identifying opportunities to shift manufacturing or adjust priorities at existing plants to stay competitive in the long term.

Price Action: MRK stock is up 1.68% at $81.18 at the last check Friday.

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