Merck (MRK) Up 3.9% Since Last Earnings Report: Can It Continue?

Core Viewpoint - Merck's recent earnings report shows strong performance with adjusted earnings and revenue growth, but challenges in specific product sales, particularly Gardasil in China, may impact future guidance and stock performance [2][3][21]. Financial Performance - Adjusted earnings for Q4 2024 were $1.72 per share, exceeding the Zacks Consensus Estimate of $1.69, and significantly up from $0.03 in the same quarter last year [2]. - Revenues for Q4 2024 rose 7% year over year to $15.62 billion, driven by Keytruda and new products, surpassing the Zacks Consensus Estimate of $15.56 billion [3]. - Full-year 2024 sales increased 7% to $64.2 billion, beating the Zacks Consensus Estimate of $64.06 billion [18]. Segment Performance - The Pharmaceutical segment generated revenues of $14.04 billion, up 7% year over year, driven by oncology and cardiovascular drugs [4]. - Keytruda sales reached $7.84 billion, a 21% increase year over year, benefiting from strong demand in various cancer indications [5]. - The Animal Health segment reported revenues of $1.40 billion, up 9% year over year, driven by higher demand and pricing [14]. Product-Specific Insights - Sales of Gardasil vaccines fell 18% to $1.55 billion due to lower demand in China, leading to a temporary halt in shipments [7][9]. - Januvia/Janumet sales declined 36% year over year to $487 million, impacted by lower demand and pricing in the U.S. [12]. - New drug Winrevair generated $200 million in sales, reflecting strong uptake in the U.S. market [13]. Guidance and Future Outlook - For 2025, Merck expects revenues between $64.1 billion and $65.6 billion, representing 2% to 4% growth, but this guidance is below the Zacks Consensus Estimate of $68.05 billion [20][21]. - The company anticipates a negative impact on sales from the temporary halt of Gardasil shipments in China and foreign exchange fluctuations [21][22]. - Adjusted earnings per share for 2025 are projected to be between $8.88 and $9.03, slightly below the Zacks Consensus Estimate of $9.18 [25]. Market Position and Trends - Merck's stock has seen a 3.9% increase over the past month, outperforming the S&P 500, but recent estimates have trended downward, indicating potential challenges ahead [1][27]. - The company holds a Zacks Rank 4 (Sell), suggesting expectations of below-average returns in the near term [30].