In its upcoming report, Merck (MRK) is predicted by Wall Street analysts to post quarterly earnings of $2.04 per share, reflecting an increase of 18.6% compared to the same period last year. Revenues are forecasted to be $16.19 billion, representing a year-over-year increase of 3.6%.Over the past 30 days, the consensus EPS estimate for the quarter has been adjusted downward by 85.2% to its current level. This demonstrates the covering analysts' collective reassessment of their initial projections during thi ...

Core Insights - Merck (MRK) is experiencing significant challenges with its second-largest product, Gardasil, which has seen a decline in sales starting in 2024 after consistent growth until 2022 [1][3] Sales Performance - In the first nine months of 2025, Gardasil sales fell by 40% year-over-year to $4.20 billion, primarily due to weak demand in China amid an economic slowdown [2][9] - The company has temporarily halted Gardasil shipments in China to manage excess inventory levels at its partner Zhifei [3][9] - Sales of other vaccines, including ProQuad, M-M-R II, Varivax, RotaTeq, and Pneumovax 23, also declined during the same period [5][9] New Products and Competition - Merck's new RSV antibody, Enflonsia, was approved in the U.S. in June 2025 and generated $79 million in sales in Q3 2025, although it faces competition from AstraZeneca/Sanofi's Beyfortus, which recorded €1.09 billion in sales, up 33.8% year-over-year [6][7] - The company anticipates that sales of Enflonsia will be a focal point in the upcoming Q4 2025 results [6] Market Performance and Valuation - Over the past six months, Merck's shares have increased by 37.2%, outperforming the industry average of 23.6% [8] - Merck's current price/earnings ratio stands at 13.54, which is lower than the industry average of 17.72 but higher than its five-year mean of 12.48 [10] Earnings Estimates - The Zacks Consensus Estimate for Merck's 2025 earnings per share has slightly decreased from $8.97 to $8.96, while the estimate for 2026 has dropped from $9.28 to $7.92 over the past 60 days [11]

Vaxcyte's PCV Franchise Highlights - Vaxcyte is developing a potential best-in-class pneumococcal conjugate vaccine (PCV) franchise, leveraging a highly attractive PCV market and an exclusive cell-free platform[10] - The company has aligned critical resources, including a strategic manufacturing approach with agreements with Lonza and Thermo Fisher Scientific, and approximately $27 billion in cash, cash equivalents, and investments as of September 30, 2025[14] - VAX-31, the broadest-spectrum PCV in the clinic, is advancing to Phase 3 with a pivotal non-inferiority study expected to start in December 2025, and has received FDA Breakthrough Therapy designation for IPD and pneumonia[15] Cell-Free Protein Synthesis Platform - Vaxcyte's cell-free protein synthesis platform enables the design and production of proteins beyond the reach of conventional methods, offering speed, flexibility, and scalability for superior conjugate and novel protein vaccines[19, 21] - The platform allows for site-specific conjugation, enabling consistent exposure of T-cell and B-cell epitopes on protein carriers, and permits the production of "tough-to-make" protein antigens[22] VAX-31 Clinical Program & Market Opportunity - VAX-31 is designed to expand protection with the broadest disease coverage in adults, potentially covering approximately 95% of IPD in U S adults aged 50 and older[15, 68] - The global pneumococcal vaccine market is currently valued at approximately $8 billion and is expected to reach approximately $13 billion by 2027, driven primarily by growth in the adult market[36, 86] VAX-24 Infant Study Results - Final VAX-24 Phase 2 infant study results demonstrate the potential to achieve the broadest coverage of any infant PCV on the market, with a safety and tolerability profile similar to the standard of care[132] - VAX-24 elicited substantial IgG, OPA, and memory responses, performing particularly well against currently circulating serotypes contained in the vaccine, with dose-dependent immune responses and little to no evidence of carrier suppression observed[134]

Core Insights - Merck is experiencing significant challenges with its second-largest product, Gardasil, which is a vaccine for preventing certain cancers caused by human papillomavirus. Sales, which had been rising until 2022, began to decline in 2024 and continued to struggle in 2025 [1][10]. Sales Performance - In the first half of 2025, Gardasil sales dropped 48% year-over-year to $2.45 billion, primarily due to weak demand in China amid an economic slowdown. This decline has led to higher-than-normal inventory levels at Merck's partner in China, Zhifei [2][10]. - Merck has decided to temporarily halt shipments of Gardasil to China to allow for inventory reduction, with no expected resumption of shipments until at least the end of 2025. Sales are projected to decline significantly in 2025 compared to 2024 levels [3][10]. - Demand for Gardasil is also weak in Japan, with expectations of continued low sales in both China and Japan for the latter half of 2025. Estimates suggest a negative compound annual growth rate (CAGR) of 15.1% for Gardasil sales over the next three years [4]. Other Vaccines and Competitive Landscape - Besides Gardasil, Merck markets several other vaccines, including ProQuad, M-M-R II, Varivax, Vaxneuvance, RotaTeq, Pneumovax 23, and the newly approved Capvaxive [5]. - Sales of other vaccines, such as ProQuad and Pneumovax 23, also saw declines in the first half of 2025. Merck's new RSV antibody, Enflonsia, was approved in the U.S. in June 2025 and is under review in the EU, aimed at protecting infants during their first RSV season [6]. - Enflonsia is the first treatment designed to protect infants with a uniform dose regardless of weight, but it faces competition from AstraZeneca and Sanofi's RSV antibody, Beyfortus, which achieved blockbuster status in its first full year of sales in 2024 [7][8]. Financial Performance and Valuation - Year-to-date, Merck's shares have declined by 15.8%, underperforming the industry, sector, and S&P 500 [9]. - From a valuation perspective, Merck's shares trade at a forward price/earnings ratio of 8.97, which is lower than the industry average of 15.62 and its 5-year mean of 12.64 [11]. - The Zacks Consensus Estimate for 2025 earnings per share has decreased from $8.94 to $8.92, and for 2026, it has decreased from $9.55 to $9.44 over the past 60 days [12].

Core Insights - Merck (MRK) reported Q2 2025 adjusted EPS of $2.13, exceeding estimates, but a 7% decline year-over-year on a reported basis due to a $200 million upfront payment for a license agreement with Hengrui Pharma [2][9][17] - Revenues decreased 2% year-over-year to $15.81 billion, aligning with consensus estimates [3][9] Sales Performance of Oncology Drugs - Keytruda sales reached $7.96 billion, a 9% increase, driven by strong uptake in various cancer indications, surpassing estimates [4][9] - Alliance revenues from Lynparza and Lenvima contributed positively, with Lynparza sales up 15% to $370 million and Lenvima revenues totaling $265 million, up 5% [5] Sales Performance of Other Key Products - HPV vaccine sales (Gardasil and Gardasil 9) fell 55% to $1.13 billion due to reduced demand in China, missing estimates [7] - Sales of other vaccines showed mixed results, with Vaxneuvance increasing 20% to $229 million, while Rotateq and Pneumovax 23 saw significant declines [8][10] Animal Health Segment - The Animal Health segment generated $1.65 billion in revenues, an 11% increase year-over-year, driven by higher demand and the inclusion of Elanco aqua business sales [12] Cost and Margin Discussion - Adjusted gross margin improved to 82.2%, up 130 basis points year-over-year, attributed to a favorable product mix [13] - Adjusted R&D spending rose 15% to $3.99 billion, influenced by the upfront payment to Hengrui Pharma and increased compensation costs [14] 2025 Guidance - Merck narrowed its 2025 revenue guidance to $64.3-$65.3 billion, reflecting a less negative currency impact [15] - Adjusted EPS guidance is now between $8.87 and $8.97, accounting for a revised negative impact from foreign exchange [16] Acquisition Plans - Merck announced plans to acquire Verona Pharma for approximately $10 billion, expected to close in Q4 2025, which will enhance its portfolio in chronic obstructive pulmonary disease [19]

Core Insights - Merck's Gardasil vaccine, crucial for preventing HPV-related cancers, has seen a significant decline in sales, particularly in China, leading to a revised sales outlook [1][2][9] - The company has temporarily halted Gardasil shipments to China to manage high inventory levels, impacting its long-term sales guidance [2][9] - Despite challenges in China, Gardasil sales remain strong in other major markets, although global growth is expected to slow [3] Sales Performance - Gardasil sales fell 40% year-over-year to $1.33 billion in Q1 2025, with a 3% decline to $8.58 billion in 2024 [1][9] - The economic slowdown in China has led to elevated inventory levels, prompting Merck to pause shipments [2][9] Market Competition - Merck's new monoclonal antibody, Enflonsia, for RSV prevention is set to launch in the U.S. but will face competition from AstraZeneca/Sanofi's Beyfortus, which achieved blockbuster status in its first year [5][6] - Other RSV vaccines, including Pfizer's Abrysvo and GSK's Arexvy, have also been approved, increasing competitive pressure [6][7] Valuation and Estimates - Merck's shares have underperformed, losing 17.8% year-to-date compared to a 2.6% industry increase [8] - The company's price/earnings ratio stands at 8.79, significantly lower than the industry average of 15.63 [10] - Consensus earnings estimates for 2025 and 2026 have been revised downwards, indicating a potential decline in profitability [11]