MRK arrives at Tuesday's Q1 print in a materially different position than it occupied three days ago — the stock has surged 10% over the past week to $122.41, yet options traders have not unwound their defensive posture.
The options market is still the loudest signal, even after the rally. The put/call ratio hit a fresh 52-week high of 0.94 on Friday, nearly two standard deviations above its 20-day average of 0.85. That is the highest defensive reading on record for this name over the past year — and it has persisted through the price recovery, not dissipated. Investors appear to be holding downside protection even as they bid the stock higher, a combination that points to uncertainty about what the print itself will deliver rather than outright bearishness.
The short side has shifted too, and it now tells a less charged story than a week ago. Short interest has fallen roughly 18% over the past month to just 1.02% of the free float — a level that barely registers for a megacap pharma. Cost to borrow has dropped sharply from its intra-week spike, easing to 0.33% after briefly touching 0.93% on May 19. Availability is effectively unlimited, with the lending pool showing no strain. Short sellers are not pressing an aggressive thesis here — that window has narrowed considerably with the stock's recent run.
The analyst community is cautiously constructive. Wells Fargo trimmed its target to $145 from $150 after the last earnings cycle while keeping an Overweight rating. JPMorgan and UBS both raised targets in April, to $135 and $145 respectively, maintaining positive ratings — a signal that the Street sees further upside but is managing expectations carefully around the Keytruda loss-of-exclusivity overhang. The mean target of $129.74 implies modest upside from Friday's close. Bulls point to Winrevair's expanding potential and a deep pipeline across oncology and cardiovascular indications. Bears centre on Keytruda dependency and the inevitable biosimilar pressure that looms over the company's primary revenue engine. The P/E has re-rated sharply higher over the past 30 days — up roughly 4.3 turns to 21.6x — compressing the margin for error on the print itself.
JP Morgan Asset Management added nearly 17 million shares in the most recent reporting period — by far the largest institutional move among top holders. That is a meaningful accumulation for a stock of this size and adds a concrete institutional bid beneath the recent price action.
Tuesday's print is therefore less about whether Merck can sustain Keytruda and more about whether management's pipeline narrative — particularly the pace of Winrevair's ramp — can justify a valuation that has expanded meaningfully into the report.
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