Merck (MRK) tops earnings, revenue expectations but guidance mixed

Merck (NYSE: MRK) reported a robust second quarter, with adjusted earnings per share (EPS) of $2.28, surpassing analysts' predictions by $0.12. The pharmaceutical giant also exceeded revenue expectations, posting $16.11 billion against a $15.85 billion consensus.

However, the company's stock has fallen by more than 6% following the report.

The company's chairman and CEO, Robert Davis, attributed the strong quarterly performance to "excellent scientific, commercial and operational execution," highlighting the successful U.S. launch of WINREVAIR and positive European opinions for adults with pulmonary arterial hypertension (PAH). Merck's KEYTRUDA sales grew by 16% to $7.3 billion, contributing significantly to the quarter's success.

Compared to the same quarter last year, Merck's total worldwide sales increased by 7%, with an 11% growth after adjusting for foreign exchange impacts. This growth was driven by a favorable product mix and lower royalty rates on key products like KEYTRUDA and GARDASIL/GARDASIL 9.

Looking ahead, Merck raised its full-year 2024 sales forecast to a range of $63.4 billion to $64.4 billion, with the midpoint slightly below the analyst consensus of $64.3 billion.

However, the company's full-year adjusted EPS guidance is set between $7.94 and $8.04, which is below the consensus estimate of $8.16 and lowered from the previous guidance range of $8.53 to $8.65. The guidance reflects a one-time charge of approximately $1.3 billion, or $0.51 per share, related to the acquisition of EyeBio.

Davis also noted the company's achievements in vaccine programs, including the FDA approval and CDC's ACIP recommendation for CAPVAXIVE, and positive results from a Phase 2b/3 trial of an investigational RSV preventative monoclonal antibody for infants.

Following the report, analysts at BMO Capital noted that Keytruda outperformed, while Winrevair is launching well. "Despite slowing expansion, Keytruda once again beat consensus by +1%, at $7.27B vs. $7.17B. This was paired with what we view as an impressive launch for Winrevair," said BMO. "This was offset by a Gardasil miss (-1%), total revenues were still ahead by +2% ($16.1B vs. $15.9B consensus)."

They added: "Despite commentary indicating potential softness in China, Gardasil sales were roughly in line (-1% vs. consensus), contributing to the company's vaccine portfolio. While we were bullish on Winrevair (BMO estimate of $60M), sales exceeded even our expectations (and the street), posting $70M (+25% vs. consensus), adding to an overall top and bottom line beat (+2% and +6% vs. consensus)."

By Sam Boughedda

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