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Will Merck (MRK) Beat Expectations This Earnings Season?

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·4 min read
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We expect Merck MRK to beat expectations when it reports first-quarter 2022 results on Apr 28 before market open. In the last reported quarter, the company delivered an earnings surprise of 23.29%.

The large drugmaker’s performance has been mixed, with the company missing earnings expectations in two of the trailing four quarters while beating in two. The company delivered a four-quarter earnings surprise of 5.33%, 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 12.5% this year so far compared with an increase of 3.8% for the industry.

Zacks Investment Research
Zacks Investment Research


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Factors to Consider

Merck and partner Ridgeback Biotherapeutics’ oral antiviral pill, molnupiravir, approved for treating high-risk adults with mild-to-moderate COVID-19 in late 2021, is likely to have been a key contributor to top-line growth in the first quarter.

The strong demand for cancer drugs is likely to have boosted Merck’s sales growth in the first quarter.

In oncology drugs, Keytruda sales are likely to have been driven by continued strong momentum in lung cancer indications and continued uptake in newer indications. The Zacks Consensus Estimate for Keytruda’s sales is $4.65 billion.

Higher alliance revenues from Lynparza driven by continued uptake across multiple approved indications in United States and Europe 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.

The Zacks Consensus Estimate for alliance revenues from Lynparza and Lenvima is $295 million and $199 million, respectively.

In the hospital specialty portfolio, higher demand and growing market share may have benefited sales of Bridion Injection. The Zacks Consensus Estimate for Bridion is $374 million.

Merck’s vaccines portfolio is witnessing continued recovery due to the return to a more normal level of wellness visits. It remains to be seen if the positive trend continued in the first quarter. Important vaccines are HPV vaccine, Gardasil/Gardasil 9 and Proquad, M-M-R II and Varivax vaccines. With regard to Gardasil, ex-U.S. sales are expected to have been driven by strong demand in China and increased supply in the first quarter. It remains to be seen if U.S. sales improved in the quarter, gaining from the increased uptake in the mid-adult cohort as well as catch-up from missed doses due to the pandemic. The Zacks Consensus Estimate for Gardasil is $1.01 billion.

Sales of pneumococcal vaccine, Pneumovax 23 are likely to have been hurt by the prioritization of COVID-19 vaccines and the market shift toward newer pneumococcal conjugate vaccines.

Meanwhile, the top line is expected to have been impacted by the loss of U.S. market exclusivity for drugs like Remicade, Noxafil and Zetia and continued pricing pressure for the diabetes franchise (Januvia/Janumet) in the United States.

The Animal Health franchise should continue to see strong sales growth.

Earnings Whispers

Our proven model predicts an earnings beat for Merck in the to-be-reported quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for a likely positive surprise. This is the case here.

Earnings ESP: Merck’s Earnings ESP is +3.36% as the Most Accurate Estimate of $1.88 is higher than the Zacks Consensus Estimate of $1.81. 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

Other Stocks to Consider

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

AbbVie ABBV with an Earnings ESP of +0.18% and a Zacks Rank #3.

AbbVie’s stock has rallied 17.7% this year so far. AbbVie topped earnings estimates in three of the last four quarters. AbbVie has a four-quarter earnings surprise of 2.55%, on average. ABBV is scheduled to release its first-quarter 2022 results on Apr 29.

Sanofi SNY has an Earnings ESP of +0.89% and a Zacks Rank #3.

Sanofi’s stock has risen 8.9% this year so far. Sanofi topped earnings estimates in each of the last four quarters. Sanofi has a four-quarter earnings surprise of 8.8%, on average. SNY is scheduled to release its first-quarter 2022 results on Apr 28.

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


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Sanofi (SNY) : Free Stock Analysis Report

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

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