Merck Raises Sales Outlook After Earnings Beat

Wall Street analysts expected Merck to report adjusted earnings of $1.95 a share on sales of $15.3 billion, according to a FactSet poll.

Merck raised its full-year sales outlook to a range of $59.7 billion to $60.2 billion, up from prior guidance of $58.6 billion to $59.6 billion,

However, it cut its full-year adjusted earnings per share guidance to $1.33 to $1.38, versus previous guidance of $2.95 to $3.05. It said that included a $5.5 billion upfront charge related to its recently announced collaboration with Japanese company
Daiichi Sankyo
(DSNKY).

Merck shares were up 0.3% in premarket trading on Thursday.

This is breaking news. Read a preview of Merck’s earnings below and check back for more analysis soon.

After a busy few weeks of news about
Merck
‘s cancer-drug pipeline, the pharmaceutical company will announce its quarterly financial results on Thursday.

Merck shares were down 6.6% so far this year as of Wednesday afternoon, amid a broader slide in pharmaceutical stocks triggered by regulatory concerns and the fact that higher interest rates have made their relatively high dividend yields less appealing. Investors will be listening to hear how the cancer treatments might help reverse that slide, as well as for management’s views on the outlook for earnings over the coming year.

Wall Street analysts expect Merck to report earnings of $1.95 per share for the third quarter, up from $1.85 in the same quarter last year, according to FactSet. They expect sales of $15.3 billion, compared with $15 billion a year earlier.

The report comes a week after Merck said it would pay the Japanese drugmaker
Daiichi Sankyo
up to $22 billion, including $4 billion up front and $1.5 billion over the next two years, to collaborate on three experimental cancer treatments known as antibody-drug conjugates.

Also last week, Merck disclosed positive data from a number of trials, many involving Keytruda, its megablockbuster cancer immunotherapy. One Merck presentation, saying overall survival was increased by half in patients with urothelial cancer who received Keytruda in combination with the
Seagen
(SGEN) and
Astellas Pharma
(ALPMY) drug Padcev, “earned a standing ovation,” according to a note from Goldman Sachs analyst Chris Shibutani.

“MRK has demonstrated a willingness to invest at a premium for high quality, more clinically de-risked assets with best-in-category potential…that fortify the company’s late-decade/early-next-decade growth outlook,” Shibutani wrote in the Monday note.

Merck’s patents on Keytruda will expire in the coming years, so the company has been spending heavily to bulk up its pipeline of products. The efforts include an $11.4 billion deal to buy Acceleron Pharma in 2021, and the new
Daiichi Sankyo
collaboration.

Merck shares trade at 13.9 times the per-share earnings expected over the next 12 months, in line with the stock’s 5-year average.

Write to Josh Nathan-Kazis at [email protected]