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Just For You Merck Just Made a Big Bet on a New Cancer Growth Engine By Jessica Mitacek. First 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.
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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 both the sector and the broader market, rising more than 12%. The drugmaker's stock recently got a boost from the announcement that it will acquire Terns Pharmaceutical—a move that should bolster its cancer-treatment pipeline and reinforce Merck's reputation as a top-tier serial acquirer. That merger-and-acquisition activity has been a major driver of the company's steady growth and market-cap expansion. Merck's market value is currently about $296 billion, trailing Eli Lilly (NYSE: LLY) and AbbVie (NYSE: ABBV), which sit 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 candidates including TERN-701, an oral allosteric BCR–ABL1 inhibitor for chronic myeloid leukemia. According to the press release, Merck will acquire Terns for $53 per share in cash, for an approximate equity value of $6.7 billion. The company described TERN-701 as a "potential best-in-class candidate for the treatment of certain patients with chronic myeloid leukemia." The Terns deal marks Merck's third multi-billion-dollar acquisition in the past year. While still in the clinical stage, TERN-701 has shown promising results, with "encouraging rates of molecular response and deep molecular response," including 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 deals like Terns underscores its central role in the pharmaceutical industry and reflects an impressive 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 financials on Feb. 3, it posted earnings per share (EPS) of $2.04, beating expectations of $2.01, and revenue of $16.40 billion, ahead of the $16.19 billion consensus. With a forward price-to-earnings multiple of 16.45, Merck's EPS is forecast to grow nearly 10% over the next year, from $9.01 to $9.90. In the 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 disease following 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 projections are attractive to investors, but the larger takeaway is how quickly Merck has scaled through acquisitions. M&A has become a hallmark of the company's strategy. The Verona Pharma and Cidara Therapeutics deals—valued at about $10 billion and $9.2 billion, respectively—were followed by the Terns announcement, valued at roughly $6.7 billion. Merck continues to pursue a bolt-on acquisition strategy to diversify and deepen its oncology, immunology, and infectious-disease pipelines. Seamlessly integrating these biotech companies has accelerated growth and expanded Merck's market share while reducing barriers to entering new markets. As a result, the company has maintained a five-year average gross margin above 73%. Those high and expanding margins point to strong pricing power and operational efficiency, enabling Merck to sustain and grow its dividend, which yields 2.84% and amounts to $3.40 per share annually. Dividends are common among mature health-care companies—especially large pharmaceutical firms and established managed-care businesses—and Merck stands out among them. The company has raised its payout for 14 consecutive years and has a five-year dividend growth rate of 5.75%. How Wall Street Feels About Merck Among the 18 analysts covering the stock, Merck carries a consensus Moderate Buy rating, with 11 analysts assigning a Buy. The average one-year price target of $127.13 implies more than 7% upside from current levels. Institutional ownership is above average at more than 76%, with inflows of nearly $37 billion exceeding outflows of roughly $19 billion over the past 12 months. Current short interest is just 1.18% of the float—about 29 million of the 2.47 billion shares outstanding—suggesting limited bearish positioning. Merck has been in the green zone on TradeSmith's financial health indicator for more than six months, and the company scores higher than 93% of the firms evaluated by MarketBeat, ranking 39th out of 858 stocks in the medical sector. | 
