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Merck (MRK) to Report Q1 Earnings: What's in the Cards?

Merck MRK will report first-quarter 2023 results on Apr 27, before market open. In the last reported quarter, the company delivered an earnings surprise of 3.85%.

This large drugmaker’s performance beat earnings expectations in each of the trailing four quarters. The company delivered a four-quarter earnings surprise of 11.21%, on average.

Merck & Co., Inc. Price and EPS Surprise

Merck & Co., Inc. Price and EPS Surprise
Merck & Co., Inc. Price and EPS Surprise

 

 

 

 

 

 

 

 

Merck & Co., Inc. price-eps-surprise | Merck & Co., Inc. Quote

Merck’s stock has risen 35% in the past year compared with an increase of 10.9% for the industry.

 

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Factors to Consider

Strong global underlying demand across its business, particularly for cancer drug Keytruda and HPV vaccine, Gardasil, is likely to have boosted sales growth in the first quarter like several previous quarters.

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In oncology drugs, Keytruda sales are likely to have been driven by continued strong momentum in metastatic indications and rapid uptake across recent earlier-stage launches. Our model estimate for Keytruda is $5.72 billion.

Higher alliance revenues from Lynparza, driven by increased demand, may have boosted oncology sales. Please note that Merck markets Lynparza in partnership with AstraZeneca AZN.

AstraZeneca and Merck formed a profit-sharing deal to co-market Lynparza and Koselugo in July 2017.

AstraZeneca and Merck’s Lynparza is approved for four cancer types, ovarian, breast, prostate and pancreatic. Lynparza is also being evaluated in an earlier-line setting for the approved cancer indications.

Alliance revenues from Lenvima may have also boosted oncology sales.

In the hospital specialty portfolio, higher demand due to recovery in surgical procedures and an increase in market share may have benefited sales of neuromuscular blockade medicine — Bridion injection. Our model estimate for Bridion is $407.3 million.

Merck and partner Ridgeback Biotherapeutics’ oral antiviral pill to treat COVID-19, Lagevrio (molnupiravir) is unlikely to have been a major contributor to top-line growth in the first quarter. Lagevrio sales should primarily consist of sales from international markets.

With regard to the HPV vaccine, Gardasil, ex-U.S. sales are expected to have been driven by strong demand in international markets like China in the first quarter. Sales are expected to have improved in the United States where revenues were hurt due to the unfavorable timing of CDC purchasing in the fourth quarter. Our model estimate for Gardasil is $1.88 billion.

Meanwhile, the top line is expected to have witnessed the impact of the loss of U.S. market exclusivity for drugs like Remicade, Noxafil and Zetia. Lower demand and pricing in the United States and generic competition in certain international markets may have hurt sales of the diabetes franchise (Januvia/Janumet).  The drugs lost market exclusivity in China in July and the European Union in September last year.

The Animal Health franchise’s sales growth is likely to have improved from the fourth-quarter levels. Our model estimate for the Animal Health unit is $1.58 billion.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Merck time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.

Earnings ESP: Merck’s Earnings ESP is -3.59%. The Zacks Consensus Estimate is $1.36 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Merck has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Here are some biotech stocks that have the right combination of elements to beat on earnings this time around:

Sanofi SNY has an Earnings ESP of +2.30% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Sanofi’s stock has risen 0.4% in the past year. Sanofi beat earnings in three of the trailing four quarters while missing in one. The company delivered a four-quarter earnings surprise of 7.68%, on average. SNY is scheduled to release its fourth-quarter results on Apr 27

Novo Nordisk NVO has an Earnings ESP of +10.71% and a Zacks Rank #1.

Novo Nordisk’s stock has risen 49.3% in the past year. Novo Nordisk topped earnings estimates in three of the last four quarters while missing in one and has a four-quarter earnings surprise of 3.0%, on average. NVO is scheduled to release its first-quarter results on May 4.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Sanofi (SNY) : Free Stock Analysis Report

AstraZeneca PLC (AZN) : Free Stock Analysis Report

Novo Nordisk A/S (NVO) : Free Stock Analysis Report

Merck & Co., Inc. (MRK) : Free Stock Analysis Report

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Zacks Investment Research