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Further Reading from MarketBeat Merck Just Made a Big Bet on a New Cancer Growth Engine Reported 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, 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 by more than 12%. For a moment… Forget about Trump's ties to Israel. Forget about reports of Iran's nuclear program. Because my research has led me to believe we're risking World War 3 with Iran for a completely different reason. Click here to find out what it is. The drugmaker's stock climbed after news it would acquire Terns Pharmaceuticals—a move that bolsters its cancer-treatment pipeline and reinforces Merck's standing as a serial acquirer. This M&A activity has helped drive steady growth and market-cap expansion. Merck's market value is currently above $296 billion, trailing 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, representing an approximate equity value of $6.7 billion. The company characterized TERN-701 as a "potential best-in-class candidate for the treatment of certain patients with chronic myeloid leukemia." The Terns deal is Merck's third multi-billion-dollar acquisition in the past year. Although still clinical-stage, TERN-701 has shown encouraging rates of molecular and deep molecular response, including in patients with high disease burden who have received multiple prior therapies. M&A Activity Has Helped Support Merck's Earnings and Dividend Profile Merck's ability to land deals like Terns underscores its central role in the pharmaceutical industry and is reflected in a strong earnings 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 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 nearly 10% over the next year, from $9.01 to $9.90. In his earnings remarks, 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 attractive to shareholders and prospective investors, the key takeaway is the rapid scale Merck has achieved through its acquisition strategy. That M&A activity—alongside the Terns announcement—has become a hallmark of the company. The Verona Pharma and Cidara Therapeutics deals were valued at roughly $10 billion and $9.2 billion, respectively, followed by the $6.7 billion Terns agreement. Merck continues to pursue bolt-on acquisitions to diversify its oncology, immunology, and infectious disease pipeline. Integrating these biotech businesses into its portfolio accelerates growth and expands Merck's market share while reducing barriers to entry in new markets. As a result, the company has maintained a five-year average gross margin above 73%. Those robust margins reflect pricing power and operational efficiency, enabling Merck to sustain and grow its dividend, which yields 2.84% (about $3.40 per share annually). Dividends are common among 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 records a five-year dividend growth rate of 5.75%. How Wall Street Feels About Merck Based on the 18 analysts currently covering the stock, Merck carries a consensus Moderate Buy rating, with 11 analysts assigning 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. Current short interest of just 1.18% of the float—about 29 million of the 2.47 billion shares outstanding—suggests bears are keeping their distance. Merck has been in the green zone on TradeSmith's financial-health indicator for more than six months, and the company ranks 39th out of 858 stocks in the medical sector as evaluated by MarketBeat, scoring higher than 93% of peers. | 
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