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More Reading from MarketBeat Media Merck Just Made a Big Bet on a New Cancer Growth Engine Authored by Jessica Mitacek. 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, not all of Big Pharma has. Shares of New Jersey-based Merck & Co. (NYSE: MRK) have outperformed the sector and the broader market, rising more than 12%. In March 1968, central banks ran out of gold and London markets shut down - miners surged 2,329%. In 1980, a COMEX delivery wall sent silver miners like Silverado up 3,989%. Today, registered gold inventory is down 25% while prices sit at record highs. Dylan Jovine of Behind the Markets says May 29, 2026 is the next inflection point - and he has identified one stock sitting on more gold than France and Italy combined. See the historical pattern and Jovine's top pick before May 29th The drugmaker's stock recently got a boost from the news it will acquire Terns Pharmaceuticals—a move that will bolster its cancer-treatment pipeline and further cement Merck's reputation as a top-tier serial acquirer. Such mergers and acquisitions (M&A) activity has played a key role in the company's steady growth and market-cap expansion, which now exceeds $296 billion—second only to 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 focused on developing therapies 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, representing an approximate equity value of $6.7 billion. Merck described TERN-701 as a "potential best-in-class candidate for the treatment of certain patients with chronic myeloid leukemia." The Terns deal marks the third multi-billion-dollar acquisition for Merck over the past year. Though TERN-701 is still in the clinic, it 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 deals like Terns underscores its central role in the pharmaceutical industry and supports an impressive earnings track record. The company has missed analyst estimates only once in the past 19 quarters, going 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, above forecasts of $16.19 billion. 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 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. While those revenue projections are attractive to shareholders and potential investors, the bigger takeaway is the rapid scale Merck routinely achieves through its acquisitions strategy. That M&A activity—in addition to the Terns announcement—has become a hallmark of the company. The Verona Pharma and Cidara Therapeutics deals, valued at $10 billion and $9.2 billion respectively, were followed by the $6.7 billion Terns agreement. Merck continues to emphasize a bolt-on acquisition strategy to diversify its oncology, immunology, and infectious disease pipeline. Seamlessly integrating these biotech companies into its portfolio is accelerating growth, expanding Merck's market share, and reducing barriers as it enters new markets. In turn, the company has sustained a five-year average gross margin above 73%. Those high and expanding margins reflect strong pricing power and operational efficiency, which help Merck maintain and grow its dividend, currently yielding 2.84% (about $3.40 per share annually). While dividends are common among mature health care companies—especially large pharmaceutical firms and established managed care companies—Merck stands out. 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 Based on 18 analysts covering the stock, Merck carries a consensus Moderate Buy rating, with 11 analysts assigning MRK a Buy rating. The average one-year price target of $127.13 implies more than 7% upside from current levels. Institutional ownership remains above average at over 76%, with inflows of nearly $37 billion outpacing outflows of roughly $19 billion over the past 12 months. Meanwhile, current short interest of just 1.18% of the float—about 29 million of the 2.47 billion shares outstanding—suggests limited bearish pressure. 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. | 
