Merck's Annual Outlook Falls Short But Keytruda, Animal Health Segments Grow

Core Insights - Merck & Co., Inc. reported fourth-quarter adjusted earnings per share of $2.04, exceeding consensus estimates of $2.01 and up from $1.72 a year ago [1] - The company achieved sales of $16.40 billion, a 5% year-over-year increase, surpassing analysts' projections of $16.19 billion [1] Segment And Drug Performance - The pharmaceutical segment generated $14.84 billion in sales, reflecting a 6% year-over-year growth, driven by oncology, cardiometabolic, and respiratory segments, despite a decline in vaccines [2] - The Animal Health segment reported revenue of $1.51 billion, an 8% increase year-over-year, primarily due to higher demand for livestock products [2] Key Drug Performance - Keytruda, an immunotherapy for cancer, achieved $8.37 billion in global sales, marking a 7% year-over-year increase, driven by strong uptake in earlier-stage indications and continued demand in metastatic indications [3] - GARDASIL and GARDASIL 9 vaccines generated $1.03 billion in sales, down 34% compared to last year, primarily due to lower demand in China and reduced sales in Japan [4] - The diabetes franchise, led by JANUVIA and JANUMET, increased 3% to $501 million, while newer products like Winrevair saw sales more than double to $467 million [4] Strategic Outlook - The company is undergoing a portfolio transformation, supported by acquisitions of Verona Pharma and Cidara Therapeutics, with a focus on delivering value for patients and shareholders [5] - For fiscal 2026, Merck issued adjusted earnings guidance of $5.00-$5.15, compared to Wall Street's estimate of $5.38, and expects sales between $65.50 billion and $67 billion, below the consensus estimate of $67.59 billion [6] - Merck's shares rose 2.26% to $115.93, reaching a new 52-week high [6]