Pharmaceuticals giant Merck & Company (MRK) has cut its full-year profit forecasts fearing a $200 million hit from President Trump’s tariff strategy.
However, a rise in vaccines for dogs and cats did help it post forecast beating first-quarter numbers.
China Trade Hit
The company said it now expects its 2025 adjusted earnings to be between $8.82 and $8.97, down from previous forecasts of $8.88 to $9.03 per share. However, it reiterated its full-year sales forecast of between $64.1 billion and $65.6 billion.
Merck, whose stock was up 1% in pre-market trading said the tariff charge was mostly related to trade with China which has been hit by huge levies by President Trump. The higher tariffs on Canada and Mexico will also make an impact, it said, but to a lesser extent.
The $200 million figure also included a one-time charge related to a license agreement with Hengrui Pharma.
First Quarter Boost
The update came as Merck reported first quarter earnings per share of $2.22, beating forecasts of $2.14 a share. Global sales however dipped 2% to $15.5 billion against forecasts of $15.3 billion.
This was largely down to a January decision to pause shipments of its Gardasil vaccine to China due to a downturn in demand. It prevents cancer from the sexually transmitted infection HPV.
Merck, however, saw strong demand for its oncology drugs and a 5% sales lift in animal health products which develop vaccines for dogs, cats and cattle.
It also saw good sales contributions from new drugs such as Winrevair, which treats a rare, deadly lung condition and the Capvaxive vaccine to protect adults from a bacteria which can cause lung infections.
This is important as its top-selling cancer therapy drug Keytruda, which recorded a 4% hike in revenues to $7.21 billion during the quarter, loses exclusivity in 2028.
The company posted net income of $5.08 billion, or $2.01 per share, for the quarter. That compares with a net income of $4.76 billion, or $1.87 per share, during the year-earlier period.
Is MRK a Good Stock to Buy Now?
On TipRanks MRK has a Moderate Buy consensus based on 11 Buy and 7 Hold ratings. Its highest price target is $138. MRK stock’s consensus price target is $108 implying an 37.16% upside. However, this could change as new analyst notes are published in the wake of today’s results.
