Merck has given investors a fresh reason to revisit its oncology story. The FDA approval of the Welireg plus Lenvima combination adds another development to the company’s newer cancer-treatment portfolio—an important piece of the puzzle for a stock whose future may depend on replacing momentum that investors fear could eventually fade.

That approval is now being used in a cited DCF analysis to argue that NYSE: $MRK may be 37% undervalued. The figure is not a promised return or a market forecast carved in stone. It is a modeled fair-value conclusion, and the distinction matters: a spreadsheet can frame the debate, but it cannot dictate where the shares ultimately trade.

Still, the catalyst is tangible. As reported by Yahoo Finance, the FDA approval for Welireg in combination with Lenvima supports the view that Merck’s oncology portfolio has more to offer beyond its established franchise. For investors assessing $MRK, that creates a concrete event around which to reassess the stock’s risk-reward profile.

A new piece in the oncology puzzle

Drug approvals do not automatically translate into commercial success, but they can change the shape of an investment narrative. In Merck’s case, the Welireg-Lenvima combination gives the company a newly approved oncology treatment to add to its portfolio. That matters because the market’s view of pharmaceutical companies often extends beyond the next product launch: investors are also looking for evidence that a company can sustain its pipeline and keep its growth engine running.

The approval therefore carries significance beyond its label. It may strengthen the argument that Merck’s cancer business is not a one-treatment story. It also offers investors a fresh point of reference when considering whether the stock’s valuation adequately reflects the potential contribution of newer oncology products.

What the 37% figure actually says

The bullish valuation case rests on a DCF model incorporating the approval. According to that analysis, $MRK may be 37% undervalued relative to the model’s estimate of fair value. That is a substantial gap on paper, but it should be read as a conclusion produced by the model—not as an assured outcome for shareholders.

DCF analysis is best understood as a structured argument about value. Here, the argument is that the Welireg-Lenvima approval could support Merck’s future oncology profile enough to justify a higher modeled valuation. Whether the market agrees may depend on how investors interpret the treatment’s importance, the durability of oncology growth and the broader outlook for Merck.

The 37% figure is a valuation signal, not a guaranteed upside target. Its usefulness lies in showing how a new oncology catalyst may alter the assumptions behind fair value.

Why Keytruda remains central to the debate

Merck’s investment case still has a looming counterweight: concerns around the Keytruda patent cliff. That issue places a premium on the company’s ability to sustain oncology momentum through newer treatments and combinations. The Welireg-Lenvima approval does not erase that concern, but it may give investors another reason to examine how Merck is building the next stage of its oncology portfolio.

This is where the approval and the valuation analysis meet. A stronger pipeline narrative could help offset some of the uncertainty surrounding Keytruda’s eventual patent-cliff pressures. Conversely, if investors remain unconvinced that newer products can carry meaningful weight, the 37% DCF discount may look less persuasive.

For $MRK, the market’s question is no longer simply whether Merck has a major oncology franchise. It is whether the company can extend that franchise with enough new momentum to support its valuation after investors begin looking beyond Keytruda. The FDA approval gives the bullish case a fresh exhibit. The patent-cliff debate ensures the courtroom is far from closed.