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Here's Why Merck (MRK) Stock Has Outperformed Industry YTD
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Merck (MRK - Free Report) boasts more than six blockbuster drugs in its portfolio, with PD-L1 inhibitor Keytruda approved for several types of cancer and alone accounting for more than 45% of the company’s pharmaceutical sales. The drug has played an instrumental role in driving Merck’s steady revenue growth in the past few years. 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.
Merck’s first-quarter results were better than expected as it beat estimates for earnings as well as sales. Keytruda continued its growth trajectory and was the key driver of the top line in the quarter. Keytruda sales rose 24% in the quarter. Sales of the HPV vaccine, Gardasil, rose 17%. The company also raised its earnings range despite a steeper impact from currency.
Adjusted earnings per share are expected to be between $8.53 and $8.65 compared with the prior expectation of $8.44 to $8.59. Merck slightly raised the upper end of its 2024 revenue guidance range from $62.7-$64.2 billion to $63.1 to $64.3 billion.
Merck’s strong first-quarter performance and the guidance increase have been one of the factors driving the stock up this year.
Merck’s stock has risen 20.3% so far this year, outperforming an increase of 15.3% for the industry.
Image Source: Zacks Investment Research
Merck also made meaningful regulatory and clinical progress this year across areas like oncology (mainly Keytruda), vaccines and infectious diseases while also executing strategic business moves like the Harpoon acquisition. All this pulled up the stock price.
The acquisition of Harpoon Therapeutics added its lead pipeline candidate, HPN328, a T cell engager targeting delta-like ligand 3, to Merck’s portfolio. HPN328 is currently being evaluated in a phase I/II study in certain patients with small cell lung cancer and other neuroendocrine tumor types.
Keytruda sales are gaining from continued strong momentum in metastatic indications and rapid uptake across earlier-stage launches. Keytruda is continuously growing and expanding into new indications and markets globally. With continued label expansion into new indications, particularly earlier-stage launches, Keytruda is expected to see continued growth.
Merck is working on different strategies to drive the long-term growth of Keytruda. These include innovative immuno-oncology combinations, including Keytruda with TIGIT, LAG3 and CTLA-4 inhibitors. In partnership with Moderna (MRNA - Free Report) , Merck is developing a personalized mRNA therapeutic cancer vaccine (V940/mRNA-4157) in combination with Keytruda for the treatment of adjuvant melanoma. Merck and Moderna initiated a pivotal phase III study in adjuvant melanoma in July 2023, while a phase III study in earlier-stage non-small cell lung cancer began in December 2023.
This year, Merck initiated pivotal phase III studies on four of its cancer candidates, most of which it added to its pipeline from the acquisitions and collaboration deals made in 2022. Alliance revenues from Lynparza and Lenvima are also boosting Merck’s oncology sales. Animal health and vaccine products are also core growth drivers.
Merck does have its share of problems, like generic competition for several drugs and rising competitive pressure, mainly on the diabetes franchise. There are concerns about the firm’s ability to grow its non-oncology business ahead of Keytruda's loss of exclusivity later in the decade.
Nonetheless, we believe strong sales of key products like Keytruda and Gardasil, a significant contribution from the Animal Health franchise and positive pipeline/regulatory developments can keep the stock afloat this year.
Merck also has some key new products lined up for launch. Between 2025 and 2030, Merck expects eight potential new product approvals. We believe that among these, V116 and Winrevair have the potential to generate significant revenues for Merck over the long term. Winrevair (sotatercept) was approved for pulmonary arterial hypertension in the United States in March 2024, while it is under review in the EU, with a decision expected in the second half of 2024. V116 is Merck’s 21-valent pneumococcal conjugate vaccine, which is under priority review in the United States, with an FDA decision scheduled for Jun 17, 2024.
Some better-ranked stocks from the drug/biotech industry are Ligand Pharmaceuticals (LGND - Free Report) and ANI Pharmaceuticals (ANIP - Free Report) , each with a Zacks Rank of 2.
In the past 90 days, the Zacks Consensus Estimate for Ligand’s 2024 earnings per share has increased from $4.42 to $4.56. During the same time frame, the consensus estimate for Ligand’s 2025 earnings per share has increased from $5.11 to $5.27. Year to date, shares of LGND have gained 20.5%.
Ligand beat estimates in each of the trailing four quarters, delivering an average surprise of 56.02%.
In the past 90 days, estimates for ANI Pharmaceuticals’ 2024 earnings per share have risen from $4.12 to $4.44. During the same period, the consensus estimate for ANI Pharmaceuticals’ 2025 earnings per share has risen from $4.80 to $5.04. Year to date, shares of ANIP have climbed 11.4%.
ANI Pharmaceuticals beat estimates in each of the last four quarters, delivering an average earnings surprise of 53.90%.
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Here's Why Merck (MRK) Stock Has Outperformed Industry YTD
Merck (MRK - Free Report) boasts more than six blockbuster drugs in its portfolio, with PD-L1 inhibitor Keytruda approved for several types of cancer and alone accounting for more than 45% of the company’s pharmaceutical sales. The drug has played an instrumental role in driving Merck’s steady revenue growth in the past few years. 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.
Merck’s first-quarter results were better than expected as it beat estimates for earnings as well as sales. Keytruda continued its growth trajectory and was the key driver of the top line in the quarter. Keytruda sales rose 24% in the quarter. Sales of the HPV vaccine, Gardasil, rose 17%. The company also raised its earnings range despite a steeper impact from currency.
Adjusted earnings per share are expected to be between $8.53 and $8.65 compared with the prior expectation of $8.44 to $8.59. Merck slightly raised the upper end of its 2024 revenue guidance range from $62.7-$64.2 billion to $63.1 to $64.3 billion.
Merck’s strong first-quarter performance and the guidance increase have been one of the factors driving the stock up this year.
Merck’s stock has risen 20.3% so far this year, outperforming an increase of 15.3% for the industry.
Image Source: Zacks Investment Research
Merck also made meaningful regulatory and clinical progress this year across areas like oncology (mainly Keytruda), vaccines and infectious diseases while also executing strategic business moves like the Harpoon acquisition. All this pulled up the stock price.
The acquisition of Harpoon Therapeutics added its lead pipeline candidate, HPN328, a T cell engager targeting delta-like ligand 3, to Merck’s portfolio. HPN328 is currently being evaluated in a phase I/II study in certain patients with small cell lung cancer and other neuroendocrine tumor types.
Keytruda sales are gaining from continued strong momentum in metastatic indications and rapid uptake across earlier-stage launches. Keytruda is continuously growing and expanding into new indications and markets globally. With continued label expansion into new indications, particularly earlier-stage launches, Keytruda is expected to see continued growth.
Merck is working on different strategies to drive the long-term growth of Keytruda. These include innovative immuno-oncology combinations, including Keytruda with TIGIT, LAG3 and CTLA-4 inhibitors. In partnership with Moderna (MRNA - Free Report) , Merck is developing a personalized mRNA therapeutic cancer vaccine (V940/mRNA-4157) in combination with Keytruda for the treatment of adjuvant melanoma. Merck and Moderna initiated a pivotal phase III study in adjuvant melanoma in July 2023, while a phase III study in earlier-stage non-small cell lung cancer began in December 2023.
This year, Merck initiated pivotal phase III studies on four of its cancer candidates, most of which it added to its pipeline from the acquisitions and collaboration deals made in 2022. Alliance revenues from Lynparza and Lenvima are also boosting Merck’s oncology sales. Animal health and vaccine products are also core growth drivers.
Merck does have its share of problems, like generic competition for several drugs and rising competitive pressure, mainly on the diabetes franchise. There are concerns about the firm’s ability to grow its non-oncology business ahead of Keytruda's loss of exclusivity later in the decade.
Nonetheless, we believe strong sales of key products like Keytruda and Gardasil, a significant contribution from the Animal Health franchise and positive pipeline/regulatory developments can keep the stock afloat this year.
Merck also has some key new products lined up for launch. Between 2025 and 2030, Merck expects eight potential new product approvals. We believe that among these, V116 and Winrevair have the potential to generate significant revenues for Merck over the long term. Winrevair (sotatercept) was approved for pulmonary arterial hypertension in the United States in March 2024, while it is under review in the EU, with a decision expected in the second half of 2024. V116 is Merck’s 21-valent pneumococcal conjugate vaccine, which is under priority review in the United States, with an FDA decision scheduled for Jun 17, 2024.
Zacks Rank & Stocks to Consider
Merck currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Merck & Co., Inc. Price and Consensus
Merck & Co., Inc. price-consensus-chart | Merck & Co., Inc. Quote
Some better-ranked stocks from the drug/biotech industry are Ligand Pharmaceuticals (LGND - Free Report) and ANI Pharmaceuticals (ANIP - Free Report) , each with a Zacks Rank of 2.
In the past 90 days, the Zacks Consensus Estimate for Ligand’s 2024 earnings per share has increased from $4.42 to $4.56. During the same time frame, the consensus estimate for Ligand’s 2025 earnings per share has increased from $5.11 to $5.27. Year to date, shares of LGND have gained 20.5%.
Ligand beat estimates in each of the trailing four quarters, delivering an average surprise of 56.02%.
In the past 90 days, estimates for ANI Pharmaceuticals’ 2024 earnings per share have risen from $4.12 to $4.44. During the same period, the consensus estimate for ANI Pharmaceuticals’ 2025 earnings per share has risen from $4.80 to $5.04. Year to date, shares of ANIP have climbed 11.4%.
ANI Pharmaceuticals beat estimates in each of the last four quarters, delivering an average earnings surprise of 53.90%.