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Just For You Merck Just Made a Big Bet on a New Cancer Growth Engine Written by Jessica Mitacek. Date Posted: 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: Elon's "Hidden" Company
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 broad market, rising more than 12%. Your electric bill is up 42% since 2019, and utilities requested $31 billion in rate hikes last year alone. The culprit: AI data centers consuming power at a scale the grid was never designed to handle. The last time a bottleneck like this formed, three overlooked infrastructure stocks surged 1,700%, 1,900%, and 900% before Wall Street caught on. One analyst has identified the next candidate - earlier in the cycle, smaller, and positioned at a chokepoint that even the largest players cannot build around. See the one infrastructure stock Wall Street is about to chase Merck's stock jumped after it announced the acquisition of Terns Pharmaceuticals—a deal that will bolster its cancer-treatment pipeline and reinforce Merck's reputation as a top-tier serial acquirer. That M&A activity has helped fuel Merck's steady growth and market-cap expansion. Merck's market capitalization 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. According to the press release, Merck will acquire Terns for $53 per share in cash, valuing the company at about $6.7 billion. Merck said the deal expands its hematology portfolio with a "potential best-in-class candidate for the treatment of certain patients with chronic myeloid leukemia." The Terns agreement is Merck's third multi-billion-dollar acquisition in the past year. Although TERN-701 is still in clinical development, it has shown "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 land the Terns deal underscores its central role in the pharmaceutical industry and its strong earnings track record: the company has missed analyst estimates only once in the past 19 quarters (since Q2 2021). When the company reported Q4 2025 financials on Feb. 3, it reported 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 his earnings call comments, 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. While those revenue forecasts are appealing to shareholders and potential investors, the main takeaway is the rapid scale Merck has achieved through its acquisition strategy. M&A activity, including the Terns deal, has become a hallmark for the company. Merck acquired Verona Pharma and Cidara Therapeutics in transactions valued at $10 billion and $9.2 billion, respectively, and most recently agreed to acquire Terns for about $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, expands market share, and lowers barriers as Merck enters new markets. As a result, the company has maintained a five-year average gross margin above 73%. Those high and expanding margins indicate superior pricing power and operational efficiency, which together allow Merck to sustain and grow its dividend, currently yielding 2.84% (or $3.40 per share annually). Dividends are common among mature health care companies—especially large pharmaceutical and established managed-care firms—but 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 Of the 18 analysts currently covering the stock, Merck has a consensus Moderate Buy rating; 11 analysts rate MRK a Buy. With an average one-year price target of $127.13, Wall Street sees potential upside of more than 7%. 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. Meanwhile, 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, according to TradeSmith's financial health indicator, for more than six months and scores higher than 93% of the companies evaluated by MarketBeat, ranking 39th out of 858 stocks in the medical sector. | 