The fifth-largest healthcare stock in the S&P 500 Index ($SPX) is proving that just because a stock is down 30%, it’s not a screaming buy.

It is all right there for value investors, isn’t it? Merck is a blue-chip stock, a Dow Jones Industrial Average ($DOWI) component, and it sells at 11.5x trailing earnings. It even pays a robust 3.6% dividend yield. What’s not to like?

There’s Little Chance of a Merck Stock Comeback Right Now

MRK’s ROAR Score, that’s what not to like. Because this simple-yet-sophisticated indicator, which estimates the direction of a stock’s next 10% move, gives MRK just a 30% chance of moving up 10% before falling another 10%. That’s after losing about one-third of its value over the past year.

As noted in last week’s debut article on my reward opportunity and risk (ROAR) approach to stock and ETF risk analysis, it doesn’t need to replace any established technical analysis approach. Instead, it asks a different question: Will the next 10% move in this stock be up or down?

In the case of MRK, the technical chart tells the story, quite graphically. 

The momentum indicator at the bottom of that chart above has lost its mojo, after MRK’s latest attempt to right its own ship. But as is the case with dip-buying opportunities in 2025 versus the past two years, they tend to occur within time frames better suited for traders, not investors.

I built ROAR scores by adding on to existing Barchart technical data. The end result translates into a single percentage figure, updated daily for any stock or ETF.

MRK has been in a serial downtrend for months, thanks in part to a “patent cliff” for its Keytruda cancer drug in a few years, and increased competition and regulatory hurdles. 

This stock is as much a proxy for the current market as any, but not because of its fundamental or sector characteristics. 

MRK is a battered blue chip, one of several that investors are trying to assess following one of the sharpest 10% selloffs in the S&P 500 in that index’s history. But a price selloff, even when accompanied by a seemingly reasonable valuation, can’t fight the tape, as they say.

MRK May Be a Victim of Market Forces and Company-Specific Headwinds

That’s why investors using different forms of price analysis can get a leg up in this market. Traditional technicals work quite well in many cases, but there is a lot of space between a simple “Buy” or “Sell” rating. Because any stock can go up in price at any time. But the risk inherent in putting capital to work now is where different investments offer very different situations.