Merck (NYSE:MRK) is scheduled to announce its first-quarter 2024 results on April 25, before the market opening, following a remarkable earnings surprise of 133.3% in the previous quarter. Here’s what investors should consider:
Factors to Keep in Mind
The Zacks Consensus Estimate for Merck’s total revenues sits at $15.34 billion, with the Pharmaceutical unit estimated at $13.53 billion. Strong global demand for key products like cancer drug Keytruda and HPV vaccine Gardasil is expected to drive sales growth.
Keytruda’s sales are anticipated to be fueled by increased uptake across various indications, including triple-negative breast cancer and renal cell carcinoma. However, Merck’s reliance on Keytruda, which accounts for around 42% of pharmaceutical sales, poses a long-term risk as patent exclusivity is expected to end post-2028.
To sustain Keytruda’s growth, Merck is exploring innovative immuno-oncology combinations and collaborating with Moderna to develop personalized mRNA therapeutic cancer vaccines.
Similarly, sales of Gardasil are projected to grow, particularly in international markets like China, and benefit from higher pricing in the United States.
Merck’s strategic acquisitions, such as the recent purchase of Harpoon Therapeutics, bolster its pipeline. Additionally, upcoming product launches like V116 and Winrevair are expected to contribute significantly to future revenues.
Despite concerns about Keytruda’s exclusivity loss, Merck remains attractive due to its strong sales performance, strategic acquisitions, and promising pipeline.
Earnings Track Record
Merck has consistently beaten earnings expectations over the past four quarters, with an average surprise of 38.17%. However, its stock performance has lagged behind the industry, rising only 8.5% in the past year compared to a 13.0% increase for the industry.
In summary, while Merck faces challenges regarding Keytruda’s exclusivity, its robust product portfolio, strategic initiatives, and promising pipeline make it an appealing investment option. Investors should closely monitor the upcoming earnings report for insights into Merck’s performance and prospects.
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