Merck tops estimates on Keytruda strength and narrows profit outlook, as it lowers estimated tariff hit

Core Insights - Merck reported strong third-quarter earnings and revenue, driven by high demand for its cancer immunotherapy Keytruda, and narrowed its full-year profit outlook due to lower estimated tariff costs [1][4]. Financial Performance - Keytruda sales exceeded $8 billion for the first time in a quarter, reaching $8.14 billion, a 10% increase year-over-year, although slightly below analyst expectations of $8.24 billion [2]. - Merck's net income for the quarter was $5.79 billion, or $2.32 per share, compared to $3.16 billion, or $1.24 per share, in the same period last year [6]. - The company reported total revenue of $17.28 billion for the quarter, a 4% increase from the previous year, surpassing expectations of $16.96 billion [10]. Guidance and Outlook - Merck adjusted its 2025 earnings forecast to between $8.93 and $8.98 per share, up from a previous range of $8.87 to $8.97 [3]. - The company expects full-year revenue to be between $64.5 billion and $65 billion, a narrower range compared to the previous guidance of $64.3 billion to $65.3 billion [5]. Challenges - Sales of Gardasil, a vaccine for HPV, fell to $1.75 billion, down 24% year-over-year, primarily due to reduced demand in China [8]. - Merck has halted shipments of Gardasil to China and does not plan to resume until at least the end of 2025, citing high inventories and soft demand [7]. Investor Focus - Investors are likely to seek updates on Gardasil's market presence in China and potential drug pricing agreements related to Trump's "most favored nation" policy [9].