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Further Reading from MarketBeat Media Merck Just Made a Big Bet on a New Cancer Growth Engine Written by Jessica Mitacek. Article 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.
- Special Report: The Biggest IPO Ever: Claim Your Stake Today
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 broad market, rising more than 12%. The drugmaker's stock recently got a shot in the arm from news that it will acquire Terns Pharmaceuticals—a move that will bolster its cancer-treatment pipeline and reinforce Merck's reputation as a top-tier serial acquirer. That mergers and acquisitions (M&A) activity has been a major driver of the company's steady growth and market-cap expansion; Merck's market cap is currently more than $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 it had reached an agreement to acquire Terns, a clinical-stage oncology company developing therapies including TERN-701, an oral allosteric BCR–ABL1 inhibitor for chronic myeloid leukemia (CML). Per the press release, Merck will acquire Terns for $53 per share in cash, for an approximate equity value of $6.7 billion, adding what the company describes as a "potential best-in-class candidate for the treatment of certain patients with chronic myeloid leukemia." The Terns agreement marks Merck's third multi-billion-dollar acquisition in the past year. Though still clinical-stage, 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 secure the Terns deal underscores its central role in the pharmaceutical industry and corresponds with a 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 results on Feb. 3, it posted earnings per share (EPS) of $2.04 versus expectations of $2.01, and revenue of $16.40 billion versus $16.19 billion expected. With a forward price-to-earnings multiple of 16.45, Merck's EPS is forecast to grow by 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. Those revenue forecasts are attractive to current shareholders and prospective investors, but the larger takeaway is how rapidly Merck has scaled 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 about $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. Integrating these biotech companies into its portfolio accelerates growth and expands Merck's market share while reducing hurdles when entering new markets. As a result, the company has maintained a five-year average gross margin above 73%. Those high and expanding margins indicate strong pricing power and operational efficiency, supporting Merck's ability to sustain and grow its dividend, which yields 2.84% (about $3.40 per share annually). Dividends are a hallmark of mature health-care companies—especially large pharmaceutical and established managed-care firms—and Merck stands out among them. 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 Of the 18 analysts covering the stock, Merck has a consensus Moderate Buy rating, with 11 analysts assigning MRK a Buy. The average one-year price target of $127.13 implies more than 7% upside. Institutional ownership remains above average at more than 76%, with inflows of nearly $37 billion exceeding outflows of around $19 billion over the past 12 months. Current short interest of just 1.18% of the float—about 29 million of the 2.47 billion shares outstanding—suggests Wall Street's bears are keeping their distance. Merck has been in the green zone on TradeSmith's financial health indicator for more than six months, and it scores higher than 93% of the companies evaluated by MarketBeat, ranking 39th out of 858 stocks in the medical sector. | 
