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Merck (MRK) Stock Up 31.6% in a Year: What Awaits in 2023?
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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, alone accounting for around 40% of its 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 line-up.
Keytruda’s sales are gaining from continued strong momentum in metastatic indications, including in some types of NSCLC, renal cell carcinoma, head and neck squamous cell carcinoma, TNBC and MSI-H cancers and rapid uptake across recent earlier-stage launches.
The Kenilworth, NJ-based firm's stock has risen 31.6% in the past year compared with an increase of 0.1% for the industry.
Image Source: Zacks Investment Research
With continued label expansion into new indications & early-stage settings, Keytruda is expected to remain a key top-line driver. The drug is presently approved to treat seven indications in earlier-stage cancers in the United States. Merck expects over half of Keytruda’s growth to come from indications in early-stage (neoadjuvant/adjuvant) treatment settings in the United States through 2025 and to represent roughly 25% of total global Keytruda sales by that time.
Merck is also 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, Merck is developing a personalized mRNA therapeutic cancer vaccine (V940/mRNA-4157) in combination with Keytruda for the treatment of adjuvant melanoma.
Alliance revenues from Lynparza and Lenvima are also boosting Merck’s oncology sales.
Please note that Merck markets Lynparza in partnership with AstraZeneca (AZN - Free Report) .
AstraZeneca and Merck had formed the profit-sharing deal to co-market Lynparza and Koselugo in July 2017.
AstraZeneca and Merck’s Lynparza is approved for four cancer types, namely, ovarian, breast, prostate and pancreatic. Lynparza is being evaluated in combination with Keytruda in late-stage studies for lung cancer indications.
In oncology, Merck expects more than 90 potential new indications by 2028, including Keytruda, Lynparza and Lenvima. Between 2025 and 2030, the company expects eight potential approvals.
Beyond oncology, which is expected to drive stable growth into the next decade, Merck has important products in its portfolio, including the Gardasil vaccine to prevent HPV-related cancers. Sales of Gardasil vaccine grew 40% in 2021 and 22% in 2022. In 2023, MRK expects to drive strong growth of Gardasil, particularly in international markets, as global immunization levels continue to be low, which implies potential for significant growth.
The company also expects Gardasil's long-term growth to benefit from increased supply as it is investing in expanding its manufacturing capacity. Merck expects Gardasil sales to potentially double by 2030 from the 2021 level
In addition, its Animal Health business is a key contributor to its top-line growth as Merck is recording above-market growth, which is expected to continue in 2023.
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. Declining revenues from the oral antiviral pill, Lagevrio (molnupiravir), for COVID should also put pressure on the top line in 2023.
Key diabetes medicines, Januvia and Janumet lost market exclusivity in the United States in January 2023. The drugs lost market exclusivity in China in July and the European Union in September last year, while the additional exclusivity of Janumet expires in April 2023. Sales of the drugs are expected to decline significantly from 2023 onward due to generic erosion.
Nonetheless, 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 in 2023.
Some better-ranked drugmakers/biotech companies are Novo Nordisk (NVO - Free Report) and Ligand Pharmaceuticals (LGND - Free Report) , both sporting a Zacks Rank of 1.
Estimates for Novo Nordisk’s 2023 earnings per share have increased from $4.15 to $4.43. Estimates for 2024 have jumped from $4.38 per share to $5.19 in the past 60 days. The stock has surged 26.6% in the past year.
Novo Nordisk beat earnings expectations in three of the trailing four quarters. The company delivered a four-quarter earnings surprise of 3.00%, on average.
Estimates for Ligand Pharmaceuticals’ 2023 earnings per share have increased from $3.30 to $4.15 over the past 60 days while that for 2024 have jumped from $3.10 per share to $4.28 over the same timeframe. The stock has declined 36% in the past year.
Ligand Pharmaceuticals beat earnings expectations in one of the trailing four quarters. The company delivered a four-quarter negative earnings surprise of 10.07%, on average.
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Merck (MRK) Stock Up 31.6% in a Year: What Awaits in 2023?
Merck (MRK - Free Report) boasts more than six blockbuster drugs in its portfolio, with PD-L1 inhibitor, Keytruda, approved for several types of cancer, alone accounting for around 40% of its 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 line-up.
Keytruda’s sales are gaining from continued strong momentum in metastatic indications, including in some types of NSCLC, renal cell carcinoma, head and neck squamous cell carcinoma, TNBC and MSI-H cancers and rapid uptake across recent earlier-stage launches.
The Kenilworth, NJ-based firm's stock has risen 31.6% in the past year compared with an increase of 0.1% for the industry.
Image Source: Zacks Investment Research
With continued label expansion into new indications & early-stage settings, Keytruda is expected to remain a key top-line driver. The drug is presently approved to treat seven indications in earlier-stage cancers in the United States. Merck expects over half of Keytruda’s growth to come from indications in early-stage (neoadjuvant/adjuvant) treatment settings in the United States through 2025 and to represent roughly 25% of total global Keytruda sales by that time.
Merck is also 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, Merck is developing a personalized mRNA therapeutic cancer vaccine (V940/mRNA-4157) in combination with Keytruda for the treatment of adjuvant melanoma.
Alliance revenues from Lynparza and Lenvima are also boosting Merck’s oncology sales.
Please note that Merck markets Lynparza in partnership with AstraZeneca (AZN - Free Report) .
AstraZeneca and Merck had formed the profit-sharing deal to co-market Lynparza and Koselugo in July 2017.
AstraZeneca and Merck’s Lynparza is approved for four cancer types, namely, ovarian, breast, prostate and pancreatic. Lynparza is being evaluated in combination with Keytruda in late-stage studies for lung cancer indications.
In oncology, Merck expects more than 90 potential new indications by 2028, including Keytruda, Lynparza and Lenvima. Between 2025 and 2030, the company expects eight potential approvals.
Beyond oncology, which is expected to drive stable growth into the next decade, Merck has important products in its portfolio, including the Gardasil vaccine to prevent HPV-related cancers. Sales of Gardasil vaccine grew 40% in 2021 and 22% in 2022. In 2023, MRK expects to drive strong growth of Gardasil, particularly in international markets, as global immunization levels continue to be low, which implies potential for significant growth.
The company also expects Gardasil's long-term growth to benefit from increased supply as it is investing in expanding its manufacturing capacity. Merck expects Gardasil sales to potentially double by 2030 from the 2021 level
In addition, its Animal Health business is a key contributor to its top-line growth as Merck is recording above-market growth, which is expected to continue in 2023.
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. Declining revenues from the oral antiviral pill, Lagevrio (molnupiravir), for COVID should also put pressure on the top line in 2023.
Key diabetes medicines, Januvia and Janumet lost market exclusivity in the United States in January 2023. The drugs lost market exclusivity in China in July and the European Union in September last year, while the additional exclusivity of Janumet expires in April 2023. Sales of the drugs are expected to decline significantly from 2023 onward due to generic erosion.
Nonetheless, 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 in 2023.
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.
Some better-ranked drugmakers/biotech companies are Novo Nordisk (NVO - Free Report) and Ligand Pharmaceuticals (LGND - Free Report) , both sporting a Zacks Rank of 1.
Estimates for Novo Nordisk’s 2023 earnings per share have increased from $4.15 to $4.43. Estimates for 2024 have jumped from $4.38 per share to $5.19 in the past 60 days. The stock has surged 26.6% in the past year.
Novo Nordisk beat earnings expectations in three of the trailing four quarters. The company delivered a four-quarter earnings surprise of 3.00%, on average.
Estimates for Ligand Pharmaceuticals’ 2023 earnings per share have increased from $3.30 to $4.15 over the past 60 days while that for 2024 have jumped from $3.10 per share to $4.28 over the same timeframe. The stock has declined 36% in the past year.
Ligand Pharmaceuticals beat earnings expectations in one of the trailing four quarters. The company delivered a four-quarter negative earnings surprise of 10.07%, on average.