Merck Shares Drop 10% Following Disappointing Guidance

Merck shares slid after the firm reported Q4 earnings, narrowly beating revenue targets. However, weak 2025 guidance disheartened investors, leading to a notable stock decline.

Date: 04-02-2025

AI Rating: 4

Stock Performance
Merck's stock saw a significant drop of 10.1% during the trading session, indicating investor concerns regarding the company's future performance. This decline in stock price is notably in contrast to the gains seen in the broader market, with the S&P 500 and Nasdaq Composite both posting increases.

Earnings and Revenue
For Q4 2024, Merck reported global sales of $15.6 billion, which reflects a 7% increase year over year and slightly surpasses market expectations. However, the company reported a net income of $3.74 billion, which, while an improvement from a $1.2 billion loss in the previous year, fell short of Wall Street's expectation of $3.92 billion.

Guidance Issues
The most impactful aspect of the earnings report was Merck's 2025 guidance, which forecasted sales of at most $65.6 billion, significantly below the expected $67.1 billion. This weak guidance has likely fueled investors' concerns about potential challenges for the company moving forward.

Market Challenges
Merck is facing headwinds particularly with key products like the HPV vaccine, Gardasil, and the cancer drug, Keytruda. The news mentions issues in the Chinese market for Gardasil and new tariffs that may affect sales. Additionally, the impending expiration of the Keytruda patent in 2028 raises concerns about future revenue streams.

Investor Outlook
While there is a slight positive note with the recent approval of Gardasil for men, which could boost sales, the overall outlook remains uncertain. With the disappointing sales forecast and challenges in significant markets, investor confidence may remain shaky.

Stocks: MRK