Merck’s post-Keytruda bridge is becoming more credible: Q2’26 sales grew, KEYTRUDA held its trajectory, and WINREVAIR accelerated. The stock has also moved beyond the price that offered a margin of safety, so the call changes from ACCUMULATE below $125 on July 21 to HOLD at the August 17 close.

The call: HOLD

Why now. Q2’26 supplied the evidence the earlier thesis needed: worldwide sales were $16.6 billion, up 5% year over year; KEYTRUDA/KEYTRUDA QLEX sales were $8.4 billion, up 5% year over year; and WINREVAIR sales reached $588 million, up 75% year over year. LIPFENDRA also moved from an approval headline to a launch asset. But MRK closed at $135.97 on August 17, 2026, 8.8% above the prior $125 accumulation ceiling. The business improved; the entry did not. (Merck Q2 results)

The evidence

The original July thesis was that LIPFENDRA, WINREVAIR and the broader pipeline could narrow the revenue gap before KEYTRUDA’s key patent protections begin expiring in 2028. That remains the right frame, not a claim that one cholesterol drug replaces a franchise that produced $31.7 billion in FY25 sales. (Merck FY25 results)

Q2’26 strengthened the bridge in two ways. KEYTRUDA/KEYTRUDA QLEX still grew 5% year over year to $8.4 billion, including $463 million from QLEX, while WINREVAIR grew 75% year over year to $588 million. Total Q2’26 sales of $16.6 billion, up 5% year over year, show that the newer assets are contributing without a collapse in the core franchise. (Q2 prepared remarks)

What changed since the July 21 issue is therefore evidence and price: the Q2 print confirmed the operating direction, while MRK rose from roughly $124.40 as of July 21, 2026 to a $135.97 close as of August 17, 2026. That 9.3% rise removes the earlier entry condition without yet proving broad LIPFENDRA payer access or durable prescription uptake.

Levels & triggers

• Act: Re-accumulate at $125 or below, provided KEYTRUDA remains at least a mid-single-digit grower and WINREVAIR continues expanding year over year.
• Confirm: Broad commercial-formulary access plus early LIPFENDRA prescriptions that demonstrate the oral format is overcoming the access friction that constrained injectable PCSK9 drugs.
• Kill: Two consecutive quarters of KEYTRUDA growth below 5% year over year combined with stalled WINREVAIR growth, or restrictive LIPFENDRA coverage that prevents a credible launch curve.
• Horizon: 12–24 months, through the first useful LIPFENDRA uptake evidence and the 2027 setup for the 2028 patent cliff.

The bear case

The strongest bear argument is concentration, not launch execution. KEYTRUDA/KEYTRUDA QLEX still contributed $8.4 billion of Merck’s $16.6 billion Q2’26 sales—about 51%—and 5% year-over-year growth is not enough by itself to neutralise a coming loss-of-exclusivity cycle. LIPFENDRA’s once-daily oral dosing solves an administration problem; it does not automatically solve prior authorisation, pricing or the need for cardiovascular-outcomes evidence. (Merck Q2 presentation)

What I’m watching: the first disclosed LIPFENDRA prescription or formulary data, and Q3’26 KEYTRUDA and WINREVAIR sales; those prints decide whether $125 remains the right re-entry or the bridge deserves a higher one.

Sources

• Merck Q2’26 results
• Q2’26 prepared remarks
• Q2’26 earnings deck
• Merck FY25 results
• SEC EDGAR — Merck filings
• Merck investor relations

Axelrod Research is independent equity analysis, for information only, not investment advice.