Merck Q4 Earnings Coming Up: Buy, Hold or Sell MRK Stock Now?

Merck MRK will report its fourth-quarter and full-year 2024 earnings on Feb. 4, before market open. The Zacks Consensus Estimate for sales and earnings is pegged at $15.56 billion and $1.72 per share, respectively. Earnings estimates for Merck for 2025 have declined from $9.57 to $9.44 per share over the past 30 days.MRK Estimate MovementImage Source: Zacks Investment ResearchFind the latest EPS estimates and surprises on Zacks Earnings Calendar.Earnings Surprise History of MerckThe healthcare bellwether’s performance has been solid, with the company exceeding earnings expectations in each of the trailing four quarters. It delivered a four-quarter earnings surprise of 37.57%, on average. In the last reported quarter, the company delivered an earnings surprise of 4.67%, as seen in the chart below.Image Source: Zacks Investment ResearchWhat Does Our Model Say for MRK?Merck has an Earnings ESP of -6.13% and a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Per our proven model, companies with the combination of a positive Earnings ESP and a Zacks Rank #1, #2 (Buy) or #3 have a good chance of delivering an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.Factors Shaping MRK’s Upcoming ResultsMerck’s top-line growth in the fourth quarter is likely to have been driven by cancer drug Keytruda, like in the previous quarters, backed by additional indications and patient demand.In oncology drugs, Keytruda sales are likely to have been driven by rapid uptake across earlier-stage indications globally, particularly in early-stage non-small cell lung cancer. Continued strong momentum in metastatic indications is also likely to have boosted sales growth. The Zacks Consensus Estimate for Keytruda’s sales is $7.73 billion, while our estimate is $7.62 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 2017. AstraZeneca and Merck’s Lynparza is approved for four cancer types, ovarian, breast, prostate and pancreatic. Lynparza is also being evaluated in combination with Keytruda in late-stage studies for lung cancer indications.Alliance revenues from Lenvima may have also boosted oncology sales.Sales of Welireg are likely to have benefited from increased uptake for the additional indication of previously treated advanced renal cell carcinoma in the United States.With regard to the HPV vaccine, Gardasil, ex-U.S. sales are expected to have been hurt by lower demand in China. In the United States, higher pricing as well as demand could have benefited sales. In the third quarter, U.S. sales benefited from favorable CDC purchasing patterns, a trend likely to have reversed in the fourth quarter.The Zacks Consensus Estimate for Gardasil is $1.66 billion, while our estimate is $1.71 billion.In the hospital specialty portfolio, generic competition in certain ex-U.S. markets, mainly Europe and the Asia Pacific region are likely to have hurt sales of neuromuscular blockade medicine — Bridion injection. However, higher demand and pricing are expected to have benefited U.S. sales. The Zacks Consensus Estimate for Bridion is $429 million, while our estimate is $434.4 million.Lower demand and pricing in the United States and generic competition in certain international markets, mainly Europe and Asia Pacific, are likely to have hurt sales of the diabetes franchise (Januvia/Janumet).New pulmonary arterial hypertension (PAH) drug Winrevair is likely to have contributed to sales growth as the U.S. launch of the drug is gaining momentum and the company is steadily adding new patients. Another new vaccine, Capvaxive, was off to an encouraging start, as informed by the company on the third-quarter conference call. Investors will be keen to know the initial sales numbers of Capvaxive.The Zacks Consensus Estimate for Merck’s Pharmaceutical unit is $13.9 billion, while our estimate is $13.97 billion.In the Animal Health franchise, growth in both companion animal and livestock products is likely to have contributed to sales. The Zacks Consensus Estimate, as well as our estimate for the Animal Health unit, is $1.34 billion.Adjusted earnings in the quarter will be hurt by charges related to the acquisition of CN201 (MK-1045) from Curon, which will be partially offset by a milestone payment from Daiichi Sankyo for expansion of an existing deal.Investors will look for fresh guidance for 2025.Nonetheless, a single quarter’s results are not important for long-term investors. Let's delve deeper to understand whether to buy, sell or hold Merck stock.MRK’s Price Performance & ValuationMerck’s stock has declined 19.2% in the past year compared with a decrease of 2.2% for the industry. The stock has also underperformed the sector and the S&P 500 Index, as seen in the chart below.Merck Stock Underperforms Industry, Sector & S&P 500Image Source: Zacks Investment ResearchFrom a valuation standpoint, Merck appears attractive relative to the industry. Going by the price/earnings ratio, the company’s shares currently trade at 10.30 forward earnings, lower than 16.0 for the industry as well as its 5-year mean of 13.28. Merck’s stock is also cheaper than other large drugmakers like AbbVie ABBV, AstraZeneca, Novo Nordisk and Eli Lilly LLY.MRK Stock ValuationImage Source: Zacks Investment ResearchOur Investment Thesis on MRK StockMerck boasts more than six blockbuster drugs in its portfolio, with blockbuster PD-L1 inhibitor Keytruda being the key top-line driver. Merck’s animal health and vaccine products are core growth drivers. It has a strong cancer pipeline, including Keytruda. Merck is investing in M&A activity to strengthen its pipeline. However, Merck is heavily reliant on Keytruda. Though Keytruda may be Merck’s biggest strength and a solid reason to own the stock, it can also be argued that the company is excessively dependent on the drug and should look for ways to diversify its product lineup. Keytruda is set to lose patent exclusivity in 2028. The company’s second-largest product, Gardasil, is also seeing grim sales in China.Stay Invested in MRK StockNo matter how the fourth-quarter results play out, we suggest that investors who own Merck stock stay invested. Though Merck’s problems are many, the company has one of the world’s best-selling drugs in its portfolio, generating billions of dollars in revenues. Though Keytruda will lose patent exclusivity in 2028, its sales are expected to remain strong until then. Though Merck does not have any new product or pipeline candidate that can replace Keytruda’s sales when it loses patent protection, it has $14.6 billion in cash and short-term investments on its balance sheet, which it can use to buy companies with promising R&D programs.It expects top-line growth in 2025 to be driven by Keytruda, especially in early-stage cancers, new products Welireg, Winrevair and Capvaxive, and the Animal Health segment, partially offset by declining sales of Gardasil in China.We believe investors with a long-term horizon should stay invested in MRK stock, while short-term investors should consider selling the same as the company may take some time to show strong earnings growth.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>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 AstraZeneca PLC (AZN): Free Stock Analysis Report Merck & Co., Inc. (MRK): Free Stock Analysis Report Eli Lilly and Company (LLY): Free Stock Analysis Report AbbVie Inc. (ABBV): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks