How Should You Play Merck (MRK) Stock Ahead of Q1 Earnings?

Core Viewpoint - Merck is expected to report first-quarter 2024 results on April 25, with a consensus estimate for total revenues at $15.34 billion, driven by strong sales of its key products, particularly Keytruda and Gardasil [1][2]. Group 1: Revenue Estimates and Key Products - The Zacks Consensus Estimate for Merck's Pharmaceutical unit is $13.53 billion, with an estimate of $6.80 billion for Keytruda sales, which accounts for approximately 42% of the company's pharmaceutical sales [2][3]. - Keytruda's sales growth is attributed to increased uptake in earlier-stage indications and its recent approval for early-stage non-small cell lung cancer [2][3]. - Gardasil sales are expected to reach $2.28 billion, with growth driven by strong international demand and higher pricing in the U.S. [4][5]. Group 2: Strategic Initiatives and Product Pipeline - Merck is pursuing innovative strategies to enhance Keytruda's long-term growth, including combinations with other immuno-oncology agents and a partnership with Moderna for a personalized mRNA therapeutic cancer vaccine [4][5]. - The company is expanding its manufacturing capacity for Gardasil and targeting broader age cohorts for vaccination [5]. - Merck has eight potential new product approvals expected between 2025 and 2030, with V116 and Winrevair identified as significant revenue generators [6]. Group 3: Earnings Performance and Market Position - Merck has consistently beaten earnings expectations, with an average earnings surprise of 38.17% over the last four quarters [8]. - The stock has increased by 8.5% over the past year, compared to a 13.0% increase for the industry [8]. - Despite a strong product lineup, concerns remain about Merck's dependency on Keytruda and the need for diversification ahead of its patent expiration post-2028 [3][6].