$Merck(MRK)$ is scheduled to report its Q1 2025 financial results before the market opens on Thursday, April 24, 2025. They will hold a conference call for investors at 9:00 a.m. ET that day.
For the revenue consensus estimate, analysts anticipate revenue around $15.48 billion, which would be a slight decrease of about 1.9% year-over-year.
Wall Street expects Merck to report EPS of approximately $2.16. This would represent a modest increase of about 4.4% compared to $2.07 in Q1 2024. Some recent estimate revisions have trended slightly lower. From tipranks, we are looking at $2.14 which represent a slight increase of about 2% compared to same period in 2024.
Key Product Sales: Continued growth is expected from Keytruda (estimated +8.7% YoY to $7.55 billion), while alliance revenue for Lenvima is expected to decline (estimated -8.1% YoY).
Merck (MRK) Last Neutral Earnings Call Saw Share Price Decline Significantly
In Q4 2024 (reported February 4, 2025), Merck beat revenue and adjusted EPS estimates, largely driven by strong Keytruda sales.
Merck had a neutral earnings call on 04 Feb 2025 which saw its share price decline by significant 21.16%.
The earnings call reflects a mixed sentiment with strong performance in key areas like oncology and new product launches, but challenges persist with GARDASIL in China and impacts from Medicare Part D redesign. Although the company remains confident in its long-term growth potential, short-term headwinds are acknowledged.
Merck (MRK) Guidance Fell Short Of Expectations In Q4 2024
During the Merck Q4 2024 earnings call, the company reported robust financial performance with total revenues reaching $15.6 billion, representing a 7% increase, or 9% when excluding foreign exchange impacts. Key growth drivers included the oncology sector, with KEYTRUDA sales surging by 21% to $7.8 billion, and the Animal Health division reporting a 13% increase in sales. However, GARDASIL experienced an 18% decline in sales due to reduced demand in China, prompting Merck to temporarily pause shipments to the region to manage elevated inventory levels.
Despite these challenges, the company maintains a positive outlook, forecasting revenue growth of 2% to 4% for 2025, excluding the anticipated impact of foreign exchange and GARDASIL sales in China. Merck also highlighted its strong gross margin of 80.8% and projected earnings per share (EPS) between $8.88 and $9.03 for 2025.
However, the company provided a full-year 2025 forecast (Revenue: $64.1-$65.6 billion; Adj. EPS: $8.88-$9.03) that fell short of analyst expectations at the time.
A key factor was the announcement of a temporary halt in Gardasil vaccine shipments to China starting in February 2025 for inventory management reasons, leading Merck to withdraw its previous $11 billion Gardasil sales target for 2030.
Market Reaction: This weaker-than-expected outlook caused MRK shares to drop significantly (around 10-11%) following the Q4 report.
Key Drivers Influencing Merck (MRK) Q1 2025 Earnings
In the previous quarter, total company revenues were $15.6 billion in Q4 2024, an increase of 7% (9% excluding foreign exchange impacts). The Human Health business sustained its momentum with sales increasing 8%, driven primarily by oncology, and the Animal Health business delivered a 13% sales growth.
Keytruda Dominance
Revenue Growth: As Merck’s top-selling drug (generating ~40% of revenue), Keytruda’s sales are likely to remain strong in early 2025, given its patent expiration in 2028. Expansion into new oncology indications (e.g., earlier-stage cancers, combination therapies) and global market penetration (especially in emerging economies) could sustain growth.
KEYTRUDA sales grew 21% to $7.8 billion, driven by robust global demand, increased uptake in earlier-stage cancers, and combination therapies in various tumor types.
WINREVAIR Growth and Clinical Success : WINREVAIR contributed $200 million in sales with continued strong prescription growth. The ZENITH trial for WINREVAIR showed statistically significant reduction in morbidity or mortality in pulmonary arterial hypertension, leading to early trial termination due to efficacy.
Competition: Rival checkpoint inhibitors (e.g., Opdivo) and emerging therapies may pressure market share, but Keytruda’s broad label approvals may mitigate this.
Vaccines Segment
Gardasil Demand: HPV vaccine sales could grow due to increased global immunization programs, particularly in Asia and Latin America. Supply constraints (if resolved by 2025) and male vaccination adoption might further boost revenue.
GARDASIL sales decreased by 18% due to lower demand in China, leading to elevated inventory levels. Merck decided to temporarily pause shipments to China to allow the inventory to reduce.
Pipeline Vaccines: New candidates (e.g., pneumococcal, RSV vaccines) could contribute if approved by 2025.
Pipeline and R&D
Oncology and Beyond: Success in late-stage trials (e.g., sotatercept for pulmonary arterial hypertension, HIF-2α inhibitors for renal cancer) may drive future revenue. Accelerated approvals could enhance Q1 2025 results.
Merck has 20 potential new growth drivers with blockbuster opportunity, including WINREVAIR, CAPVAXIVE, and various late-phase clinical programs, representing over $50 billion of potential revenue opportunity.
Acquisitions: Strategic deals (e.g., Acceleron in 2021) may bolster the pipeline, with potential launches by 2025.
Animal Health Business Growth: The Animal Health business achieved 13% sales growth, driven by higher demand for poultry and sales from the recently acquired aqua portfolio from Elanco.
COVID-19 Impact
Lagevrio Sales: Demand for molnupiravir may decline as COVID-19 becomes endemic, but recurring waves or stockpiling contracts could provide residual revenue.
Cost Management and Margins
Operating Efficiency: Merck’s focus on trimming expenses (e.g., manufacturing optimization, digital transformation) might improve margins, offsetting R&D and commercialization costs.
Regulatory and Macro Risks
Drug Pricing Pressures: U.S. Inflation Reduction Act provisions (e.g., Medicare negotiation) could impact pricing flexibility by 2025, particularly for Keytruda.
The Medicare Part D redesign is expected to negatively impact sales by approximately $400 million, primarily affecting products like WINREVAIR and the portfolio of small molecule oncology products.
Currency and Inflation: Global FX volatility and input cost inflation may affect international revenue and margins.
VAXNEUVANCE Sales Decline: VAXNEUVANCE sales decreased 9%, as growth from international market launches was more than offset by competitive pressures in the U.S.
Uncertain GARDASIL Long-Term Target: Merck withdrew the $11 billion long-term target for GARDASIL sales due to uncertainties in the timing of economic recovery in China.
Merck (MRK) Price Target
Based on 17 Wall Street analysts offering 12 month price targets for Merck & Company in the last 3 months. The average price target is $109.44 with a high forecast of $138.00 and a low forecast of $89.00. The average price target represents a 40.31% change from the last price of $78.00.
I think we need to consider the patent cliffs to look at MRK price target, while Keytruda’s patent expires in 2028, investor anxiety about future generics may affect sentiment in 2025.
There might be late-stage trial failures or regulatory delays could dampen growth expectations. Sales target for Gardasil withdrawal would probably add another blow to the price target.
Technical Analysis - Exponential Moving Average (EMA)
From the technical, we are seeing MRK trading in a very weak momentum, though it had rebounded slightly from the oversold region, the bears are still very much in control, and we can see that it is in a downside movement, with market experiencing selloff with mixed sentiment.
The stock has significantly underperformed the broader market over the past year, attributed partly to the Gardasil news, concerns about future Keytruda competition/patent expiry, and challenges in China.
As investors I think we should focus on these factors to monitor the stock price movement.
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Actual revenue and EPS performance compared to the estimates (especially given the forecast for a slight year-over-year revenue decline).
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Sales performance of key growth drivers like Keytruda.
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Updates on the Gardasil situation in China.
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Any revisions to the full-year 2025 guidance previously issued.
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Commentary on recent pipeline developments, such as the subcutaneous formulation of Keytruda and the newly approved pneumococcal vaccine CAPVAXIVE.
I would not be looking at this stock yet unless we can see that the bulls are showing signs of gaining control.
Summary
Merck’s Q1 2025 earnings are poised to reflect sustained leadership in oncology and vaccines, tempered by pipeline execution risks and external pressures.
As investors we should monitor management’s 2024 guidance updates, pipeline progress, and Keytruda’s market dynamics. While specifics are speculative, Merck’s strategic positioning suggests resilience and growth potential.
Appreciate if you could share your thoughts in the comment section whether you think Merck could still exhibit resilience with the sales for Gardasil dropping and would further dropped with US-China tariffs on-going.
@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
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