Investing.com -- Merck & Co. (NYSE: MRK) shares have dropped 1.6% premarket on Tuesday after the pharmaceutical giant issued 2026 guidance below analyst expectations, overshadowing solid fourth-quarter results that met earnings forecasts and slightly exceeded revenue estimates.

The company reported fourth-quarter adjusted earnings of $2.04 per share, matching analyst expectations, while revenue rose 5% to $16.4 billion, surpassing the consensus estimate of $16.18 billion. Revenue growth was primarily driven by strength in oncology and animal health, along with increasing contributions from newer products.

Merck's flagship cancer drug KEYTRUDA continued its strong performance, with sales rising 7% to $8.37 billion in the quarter. The company's animal health division also showed robust growth, with sales increasing 8% to $1.51 billion, primarily due to higher demand for livestock products.

However, investors have focused on Merck's disappointing 2026 outlook, with the company projecting earnings of $5.00 to $5.15 per share, well below analyst expectations of $5.63. The guidance includes a one-time charge of approximately $3.65 per share related to the acquisition of Cidara Therapeutics. Revenue for 2026 is expected to be between $65.5 billion and $67.0 billion, slightly below the consensus estimate of $67.58 billion.

"In 2025, we continued to advance leading-edge science to deliver transformative medicines and vaccines that are improving health outcomes for patients around the world," said Robert M. Davis, chairman and chief executive officer. "Our business benefited from demand for our innovative portfolio, including for KEYTRUDA, increasing contributions from new launches in cardiometabolic and respiratory as well as vaccines, and strong performance of Animal Health."

For the full year 2025, Merck reported worldwide sales of $65.0 billion, representing 1% growth (2% excluding foreign exchange impact). KEYTRUDA sales reached $31.7 billion, up 7% YoY, while newer products like WINREVAIR and CAPVAXIVE contributed $1.4 billion and $759 million, respectively.