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Merck (MRK) to Report Q3 Earnings: What's in the Cards?
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We expect Merck (MRK - Free Report) to beat expectations when it reports third-quarter 2023 results on Oct 26, before market open. In the last reported quarter, the company delivered an earnings surprise of 5.07%.
Factors to Consider
Strong global underlying demand across its business, particularly for cancer drug Keytruda and HPV vaccine, Gardasil, is likely to have boosted sales growth in the third quarter like the previous quarters.
In oncology drugs, Keytruda sales are likely to have been driven by continued strong momentum in metastatic indications and rapid uptake across recent earlier-stage launches. The Zacks Consensus Estimate for Keytruda’s sales is $6.26 billion, while our model estimate is $6.3 billion.
However, Keytruda’s year-over-year growth rate in the United States is expected to have moderated in the third quarter due to a slowdown in launches and continued pricing headwinds. In addition, sales in the second quarter had benefited from the favorable timing of a wholesaler purchase in the United States that is expected to have reversed in the third quarter.
Higher alliance revenues from Lynparza, driven by increased demand, may have boosted oncology sales. Please note that Merck markets Lynparza in partnership with AstraZeneca (AZN - Free Report) .
Alliance revenues from Japan’s Eisai for Lenvima may have also boosted oncology sales.
In the hospital specialty portfolio, higher demand and increased market share may have benefited sales of the neuromuscular blockade medicine — Bridion injection. The Zacks Consensus Estimate for Bridion is $442 million.
With regard to the HPV vaccine, Gardasil, ex-U.S. sales are expected to have been driven by strong demand in international markets like China in the third quarter. Sales in China have been benefiting from the expanded indication of Gardasil 9 for girls and women 9 to 45 years of age. However, the rate of growth in the second half is expected to have been less than the first half due to the timing of shipments in China. The Zacks Consensus Estimate for Gardasil is $2.74 billion, while our estimate is $2.81 billion.
Meanwhile, lower demand and pricing in the United States and generic competition in certain international markets, mainly Europe, are likely to have hurt sales of the diabetes franchise (Januvia/Janumet). The drugs lost market exclusivity in China in July and the European Union in September last year.
The Zacks Consensus Estimate for Merck’s Pharmaceutical unit as well as our model estimate is $13.76 billion.
The Animal Health franchise’s sales declined in the second quarter. It remains to be seen if the trend improved in the third quarter. The Zacks Consensus Estimate for the Animal Health unit is $1.42 billion, while our estimate is $1.34 billion.
Earnings Surprise History
This large drugmaker beat earnings expectations in each of the trailing four quarters. The company delivered a four-quarter earnings surprise of 6.05%, on average.
Merck’s stock has declined 7.5% this year so far compared with an increase of 4.6% for the industry.
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model predicts an earnings beat for Merck in the to-be-reported quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for a likely positive surprise. This is the case here, as elaborated below.
Earnings ESP: Merck’s Earnings ESP is +1.73% as the Most Accurate Estimate of $1.98 is higher than the Zacks Consensus Estimate of $1.94. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Merck has a Zacks Rank #3.
Other Stocks to Consider
Here are some large drug/biotech stocks that also have the right combination of elements to beat on earnings this time around:
AstraZeneca’s stock has declined 5.9% so far this year. AstraZeneca beat earnings estimates in the last four quarters. AZN delivered a four-quarter earnings surprise of 8.38%, on average. AstraZeneca is scheduled to release its third-quarter results on Nov 9.
Biogen (BIIB - Free Report) has an Earnings ESP of +3.41% and a Zacks Rank #3.
Biogen’s stock has declined 7% year to date. Biogen topped earnings estimates in the last four quarters. BIIB came up with a four-quarter earnings surprise of 10.53%, on average. BIIB is scheduled to release its third-quarter results on Nov 8.
Vertex Pharmaceuticals Incorporated (VRTX - Free Report) has an Earnings ESP of +1.25% and a Zacks Rank #3.
Vertex’s stock has declined 25.3% so far this year. The company beat earnings estimates in the last four quarters. VRTX has a four-quarter earnings surprise of 4.91%, on average. VRTX is scheduled to release its third-quarter results on Nov 6.
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Merck (MRK) to Report Q3 Earnings: What's in the Cards?
We expect Merck (MRK - Free Report) to beat expectations when it reports third-quarter 2023 results on Oct 26, before market open. In the last reported quarter, the company delivered an earnings surprise of 5.07%.
Factors to Consider
Strong global underlying demand across its business, particularly for cancer drug Keytruda and HPV vaccine, Gardasil, is likely to have boosted sales growth in the third quarter like the previous quarters.
In oncology drugs, Keytruda sales are likely to have been driven by continued strong momentum in metastatic indications and rapid uptake across recent earlier-stage launches. The Zacks Consensus Estimate for Keytruda’s sales is $6.26 billion, while our model estimate is $6.3 billion.
However, Keytruda’s year-over-year growth rate in the United States is expected to have moderated in the third quarter due to a slowdown in launches and continued pricing headwinds. In addition, sales in the second quarter had benefited from the favorable timing of a wholesaler purchase in the United States that is expected to have reversed in the third quarter.
Higher alliance revenues from Lynparza, driven by increased demand, may have boosted oncology sales. Please note that Merck markets Lynparza in partnership with AstraZeneca (AZN - Free Report) .
Alliance revenues from Japan’s Eisai for Lenvima may have also boosted oncology sales.
In the hospital specialty portfolio, higher demand and increased market share may have benefited sales of the neuromuscular blockade medicine — Bridion injection. The Zacks Consensus Estimate for Bridion is $442 million.
With regard to the HPV vaccine, Gardasil, ex-U.S. sales are expected to have been driven by strong demand in international markets like China in the third quarter. Sales in China have been benefiting from the expanded indication of Gardasil 9 for girls and women 9 to 45 years of age. However, the rate of growth in the second half is expected to have been less than the first half due to the timing of shipments in China. The Zacks Consensus Estimate for Gardasil is $2.74 billion, while our estimate is $2.81 billion.
Meanwhile, lower demand and pricing in the United States and generic competition in certain international markets, mainly Europe, are likely to have hurt sales of the diabetes franchise (Januvia/Janumet). The drugs lost market exclusivity in China in July and the European Union in September last year.
The Zacks Consensus Estimate for Merck’s Pharmaceutical unit as well as our model estimate is $13.76 billion.
The Animal Health franchise’s sales declined in the second quarter. It remains to be seen if the trend improved in the third quarter. The Zacks Consensus Estimate for the Animal Health unit is $1.42 billion, while our estimate is $1.34 billion.
Earnings Surprise History
This large drugmaker beat earnings expectations in each of the trailing four quarters. The company delivered a four-quarter earnings surprise of 6.05%, on average.
Merck & Co., Inc. Price and EPS Surprise
Merck & Co., Inc. price-eps-surprise | Merck & Co., Inc. Quote
Merck’s stock has declined 7.5% this year so far compared with an increase of 4.6% for the industry.
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model predicts an earnings beat for Merck in the to-be-reported quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for a likely positive surprise. This is the case here, as elaborated below.
Earnings ESP: Merck’s Earnings ESP is +1.73% as the Most Accurate Estimate of $1.98 is higher than the Zacks Consensus Estimate of $1.94. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Merck has a Zacks Rank #3.
Other Stocks to Consider
Here are some large drug/biotech stocks that also have the right combination of elements to beat on earnings this time around:
AstraZeneca has an Earnings ESP of +5.13% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
AstraZeneca’s stock has declined 5.9% so far this year. AstraZeneca beat earnings estimates in the last four quarters. AZN delivered a four-quarter earnings surprise of 8.38%, on average. AstraZeneca is scheduled to release its third-quarter results on Nov 9.
Biogen (BIIB - Free Report) has an Earnings ESP of +3.41% and a Zacks Rank #3.
Biogen’s stock has declined 7% year to date. Biogen topped earnings estimates in the last four quarters. BIIB came up with a four-quarter earnings surprise of 10.53%, on average. BIIB is scheduled to release its third-quarter results on Nov 8.
Vertex Pharmaceuticals Incorporated (VRTX - Free Report) has an Earnings ESP of +1.25% and a Zacks Rank #3.
Vertex’s stock has declined 25.3% so far this year. The company beat earnings estimates in the last four quarters. VRTX has a four-quarter earnings surprise of 4.91%, on average. VRTX is scheduled to release its third-quarter results on Nov 6.