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Merck (NYSE: $MRK) Beats Q4 Estimates As Keytruda Sales Surge

Merck

Merck & Co (NYSE: $MRK) is a multinational pharmaceutical company that offers innovative health solutions to millions of patients via prescriptions, therapies, vaccines, and animal health products. Founded in 1668, it is one of the oldest healthcare companies.

On Thursday, February 1, 2024, the company announced market-beating results for the fourth quarter. An increase in sales for Keytruda, the best-selling prescription drug worldwide, boosted Merck’s numbers. The sales of Keytruda rose by 21% in the quarter to $6.6 billion, better than analysts’ estimates of $6.5 billion.

For FY23, Keytruda had $25 billion in sales, higher than the peak sales of AbbVie’s arthritis drug, Humira. By 2026, analysts predict Keytruda could bring in $30 billion in sales. However, it will lose patent protection by the end of this decade.

Merck’s Plans Beyond Keytruda 

With keytruda patents set to expire by 2030, Merck has been on the lookout for more deals. It is currently seeking out up to $15 billion in deals as it plans for revenue loss after Keytruda. Thus far, they have inked numerous deals over the past year, including a $5.5 billion payout to Daiichi Sanyo, based in Japan, for a right to co-develop three cancer medications. 

In its Q4 report, Merck raised its outlook for new oncology products to $20 billion from over $10 million. These products are set for release in the mid-2030s. The company also raised its mid-2030s outlook for its new cardiometabolic products to around $15 billion from over $10 billion. 

In an earnings call presentation, Merck CFO, Caroline Litchfield, said that the company has “ample” deal-making capacity. She added, We are in a position of financial and operational strength.”

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Merck Fourth Quarter & Full-year 2023 Results

The year 2023 was an impressive one for the company. They reported fourth-quarter sales of $14.6 billion, surpassing estimates of $14.5 billion, and a 6% increase from the same quarter last year. Excluding LAGEVRIO and the impact of FX, growth was 13%.

Merck’s full-year earnings also increased by 1%, totaling $60.1 billion with a GAAP EPS of $0.14 and non-GAAP EPS of $1.51.

Commenting on the results, the CEO, Rob Davis, said, “We also made investments of approximately $30 billion in research and development in our ongoing effort to discover, develop and collaborate to propel the next generation of impactful innovation.”

Full Year 2024 Outlook

Merck anticipates a non-GAAP EPS of $8.44 to $8.54, with total sales of $62.7-$64.2 billion in fiscal 2024. Their forecast is in line with Wall Street’s estimates of an $8.40 non-GAAP EPS and revenue of $63.5 billion.

Stock Update: $MRK

Following the release of its Q4 results, MRK stock closed trading 4.64% higher on Thursday, February 1, 2024. Its closing price was $126.38, with a market cap of $320.25 billion. Since the beginning of 2024, Merck’s stock has risen by 11.60%. Over the past 12 months, holders of the stock have seen returns of 22.15%.

MRK Stock Forecast

The stock’s closing price is a few cents shy of its 52-week high of $126.43 per share. It is currently above its 50-day and 200-day moving averages of $110.53 and $109.24, respectively. Based on these metrics and the company’s guidance, stock analysts have given the stock an overall strong buy rating. They project a wide range for the stock, with a high of $140 and a low of $123. Their average target for MRK stock is $133.21, an upside of 5.4%.

Is Merck Stock A Buy?

Merck beat the analysts’ estimates in its Q4 results. It also had a slightly better performance than its FY22 results. Keytruda continues to perform well, and the company is already working on alternative revenue streams once the patents run out.

Based on its own estimates, the company expects to continue posting strong quarterly numbers up until 2030 and beyond. Consequently, the strong buy rating is an accurate representation of the stock’s future performance.

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