Pharmaceutical giant Merck (MRK) declined 2.4% yesterday despite reporting better-than-expected results for the third quarter of 2024. The company’s performance was aided by strong demand for its cancer drug, Keytruda, and higher animal health business sales, partly offset by one-time acquisition-related costs. As a result of these one-time expenses, MRK also lowered its full-year outlook.
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The company’s Q3 sales increased 4% to $16.66 billion and came ahead of the consensus estimate of $16.47 billion. Further, MRK reported adjusted earnings of $1.57, which surpassed analysts’ estimates of $1.48.
Meanwhile, earnings declined 26% year-over-year due to charges related to the Eyebiotech acquisition and the licensing agreement with Curon Biopharmaceutical. Also, a payment from Daiichi Sankyo contributed to the reduced EPS.
Merck’s Key Drugs Deliver Mixed Performance in Q3
The company’s key drug, Keytruda, accounted for 50% of Merck’s Q3 revenues. The drug generated $7.43 billion in sales during the quarter, up 17% year-over-year. This growth was fueled by strong demand for the drug in earlier-stage and metastatic cancers.
Moreover, the company’s animal health business also performed well, with sales up 6% year-over-year. Also, MRK’s lung disease drug, Winrevair, launched in the U.S. in Q2, delivered $149 million in sales during the third quarter.
However, Merck’s HPV vaccine, Gardasil, experienced an 11% decline in sales from the prior year quarter. The company attributed this decrease to lower demand in China.
MRK Lowers Outlook
Merck lowered its full-year guidance. It now expects adjusted EPS in the range of $7.72 to $7.77, down from the previous forecast of $7.94 to $8.04. The company also narrowed its revenue guidance to a range of $63.6 billion to $64.1 billion, down from $63.4 billion to $64.4 billion.
However, Merck remains optimistic about the long-term prospects of its key products, including Keytruda and Gardasil. Importantly, the company expects Gardasil sales to reach $11 billion by 2030, driven by strong demand globally.
Is MRK Stock a Good Buy?
Turning to Wall Street, MRK has a Strong Buy consensus rating based on 17 Buys and three Holds assigned in the last three months. At $137.07, the average Merck price target implies a 33.96% upside potential. Shares of the company have declined about 20% in the past six months.
