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What's in the Cards for Merck (MRK) This Earnings Season?
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Merck & Co., Inc. (MRK - Free Report) will report first-quarter 2018 results on May 1, before market open. Last quarter, the company delivered a positive earnings surprise of 4.26%.
Merck’s performance has been pretty impressive, with the company exceeding earnings expectations in all the trailing four quarters. The average positive earnings surprise over the last four quarters is 8.54%
Merck’s shares have risen 6.8% this year so far against a 4.3% decrease for the industry.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Merck’s new products like cancer drugs Keytruda and Lynparza and Bridion Injection are likely to drive the top line. However, loss of market exclusivity for several drugs, softness in the diabetes (Januvia/Janumet) franchise, and lower sales of key products like Zostavax and Zepatier due to competitive pressure may hurt sales.
Keytruda sales are being driven by the launch of new indications globally. Keytruda sales are gaining particularly from strong momentum in the indication of first-line lung cancer as it is the only anti-PD-1 approved in the setting.
The Keytruda development program also significantly advanced in 2017 with regulatory approvals for six new indications in the United States, four in Europe and three in Japan. The approvals expanded the patient population, driving sales higher in the second half of 2017. This momentum is expected to be maintained in 2018 as well. Strong demand in most markets continues to drive sales of Bridion (sugammadex) Injection.
However, rising competitive pressure has begun to hurt sales of relatively newer drugs like Zepatier. In the fourth quarter, Zepatier sales declined sequentially due to reduction in share and volume due to increasing competition. On the call, Merck had warned that the negative trend will continue in 2018 as most markets outside the United States will start to come under pressure.
Among the older products, while continued pricing pressure is hurting sales of Januvia, lower demand due to competition is hurting sales of Isentress.
Among the vaccines, Zostavax sales will continue to be hurt by strong competition from Glaxo’s (GSK - Free Report) newly approved shingles vaccines, Shingrix. Gardasil/Gardasil 9 sales were soft in the fourth quarter due to lower sales in the United States. Nonetheless, on the fourth-quarter call, the company had mentioned that underlying growth and increased coverage rates were still strong in the United States. It remains to be seen if Gardasil sales improve in the soon-to-be reported quarter. The Zacks Consensus Estimate for total sales of the Vaccine segment is pegged at $1.5 billion.
Animal health franchise sales are likely to remain strong. The Zacks Consensus Estimate for Animal Health segment sales is $1.05 billion.
Earnings Whispers
Our proven model does not conclusively show that Merck will beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.
Zacks ESP: Its Earnings ESP is 0.00% as the Zacks Consensus Estimate and the Most Accurate estimate are pegged at 99 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Merck’s Zacks Rank #2 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings beat.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some large-cap health care stocks worth considering per our model. These have the right combination of elements to beat on earnings this time around:
Pfizer, Inc. (PFE - Free Report) is also slated to announce financial figures on May 1. The company has an Earnings ESP of +1.36% and is a Zacks #2 Ranked stock.
Investor Alert: Breakthroughs Pending
A medical advance is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating substantial revenue, and even more wondrous products are in the pipeline.
Cures for a variety of deadly diseases are in sight, and so are big potential profits for early investors. Zacks names 5 stocks to buy now.
Image: Bigstock
What's in the Cards for Merck (MRK) This Earnings Season?
Merck & Co., Inc. (MRK - Free Report) will report first-quarter 2018 results on May 1, before market open. Last quarter, the company delivered a positive earnings surprise of 4.26%.
Merck’s performance has been pretty impressive, with the company exceeding earnings expectations in all the trailing four quarters. The average positive earnings surprise over the last four quarters is 8.54%
Merck & Co., Inc. Price and EPS Surprise
Merck & Co., Inc. Price and EPS Surprise | Merck & Co., Inc. Quote
Merck’s shares have risen 6.8% this year so far against a 4.3% decrease for the industry.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Merck’s new products like cancer drugs Keytruda and Lynparza and Bridion Injection are likely to drive the top line. However, loss of market exclusivity for several drugs, softness in the diabetes (Januvia/Janumet) franchise, and lower sales of key products like Zostavax and Zepatier due to competitive pressure may hurt sales.
Keytruda sales are being driven by the launch of new indications globally. Keytruda sales are gaining particularly from strong momentum in the indication of first-line lung cancer as it is the only anti-PD-1 approved in the setting.
The Keytruda development program also significantly advanced in 2017 with regulatory approvals for six new indications in the United States, four in Europe and three in Japan. The approvals expanded the patient population, driving sales higher in the second half of 2017. This momentum is expected to be maintained in 2018 as well. Strong demand in most markets continues to drive sales of Bridion (sugammadex) Injection.
However, rising competitive pressure has begun to hurt sales of relatively newer drugs like Zepatier. In the fourth quarter, Zepatier sales declined sequentially due to reduction in share and volume due to increasing competition. On the call, Merck had warned that the negative trend will continue in 2018 as most markets outside the United States will start to come under pressure.
Among the older products, while continued pricing pressure is hurting sales of Januvia, lower demand due to competition is hurting sales of Isentress.
Among the vaccines, Zostavax sales will continue to be hurt by strong competition from Glaxo’s (GSK - Free Report) newly approved shingles vaccines, Shingrix. Gardasil/Gardasil 9 sales were soft in the fourth quarter due to lower sales in the United States. Nonetheless, on the fourth-quarter call, the company had mentioned that underlying growth and increased coverage rates were still strong in the United States. It remains to be seen if Gardasil sales improve in the soon-to-be reported quarter. The Zacks Consensus Estimate for total sales of the Vaccine segment is pegged at $1.5 billion.
Animal health franchise sales are likely to remain strong. The Zacks Consensus Estimate for Animal Health segment sales is $1.05 billion.
Earnings Whispers
Our proven model does not conclusively show that Merck will beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.
Zacks ESP: Its Earnings ESP is 0.00% as the Zacks Consensus Estimate and the Most Accurate estimate are pegged at 99 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Merck’s Zacks Rank #2 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings beat.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some large-cap health care stocks worth considering per our model. These have the right combination of elements to beat on earnings this time around:
Bristol-Myers Squibb Company (BMY - Free Report) has an Earnings ESP of +0.82% and a Zacks Rank of 3. The company is scheduled to report first-quarter earnings on Apr 26. You can see the complete list of today’s Zacks #1 Rank stocks here.
Pfizer, Inc. (PFE - Free Report) is also slated to announce financial figures on May 1. The company has an Earnings ESP of +1.36% and is a Zacks #2 Ranked stock.
Investor Alert: Breakthroughs Pending
A medical advance is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating substantial revenue, and even more wondrous products are in the pipeline.
Cures for a variety of deadly diseases are in sight, and so are big potential profits for early investors. Zacks names 5 stocks to buy now.
Click here to see them >>