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Merck (MRK) to Report Q1 Earnings: What's in the Cards?
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Merck (MRK - Free Report) will report first-quarter 2021 results on Apr 29 before market open. In the last-reported quarter, the company delivered a negative earnings surprise of 2.94%.
The large drugmaker’s performance has been mixed, with the company exceeding earnings expectations in three of the trailing four quarters while missing in one. The company delivered a four-quarter earnings surprise of 11.50%, on average.
Merck’s stock has declined 4.8% this year so far against an increase of 3.1% for the industry.
Factors to Consider
Strong demand for cancer drugs is likely to have boosted sales growth in the first quarter. However, Merck expects some residual negative impacts of COVID-19 on sales of some key products, mainly vaccines, in the first quarter of 2021. Overall, reduced wellness visits and delayed procedures due to the pandemic and generic competition for legacy drugs is expected to have partially offset the growth.
In oncology drugs, Keytruda sales are likely to have been driven by continued strong momentum in the lung cancer indications and continued uptake in newer indications. However, the impact of COVID-19 on Keytruda sales remains to be seen. The Zacks Consensus Estimate for Keytruda’s sales is $4.09 billion. Alliance revenues from Lynparza and Lenvima may have contributed to higher oncology sales. Please note that Merck markets Lynparza in partnership with AstraZeneca (AZN - Free Report) .
In the hospital specialty portfolio, lower elective surgery proceduresmay have had an impact on sales of Bridion Injection. The Zacks Consensus Estimate for Bridion is $360 million.
Meanwhile, the top line is expected to reflect the impact of loss of U.S. market exclusivity for drugs like Remicade, Nuvaring and Zetiaand continued pricing pressure on the diabetes franchise (Januvia/Janumet) in the United States. Merck markets Remicade in partnership with J&J (JNJ - Free Report) .
In the vaccines portfolio, sales of Gardasil vaccines in the fourth quarter benefited from CDC stockpile replenishment and the initial borrowing in the fourth quarter of 2019. These one-time benefits were absent in the first quarter of 2021. Meanwhile, the pandemic may have hurt sales in the quarter. The Zacks Consensus Estimate for Gardasil is $1.31 billion.
The Animal Health franchise is likely to have seen strong sales growth driven by higher demand.
Key Recent Development
In April, Merck announced discontinuation of the development of its investigational biological therapeutic, MK-7110 (formerly known as CD24Fc), for treating hospitalized patients with COVID-19 as the drug was not expected to be available before the first half of 2022.
Instead, the company will focus on developing molnupiravir, its investigational oral antiviral for COVID-19, which it is developing in partnership with Ridgeback Biotherapeutics. In March, Merck and Ridgeback Biotherapeutics announced promising preliminary data from the ongoing phase IIa study on molnupiravir in patients infected with SARS-CoV-2 or COVID-19. Data on one secondary objective from the study showed a quicker reduction in infectious virus, as measured by vero cell line culture, in patients with symptomatic COVID-19.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Merck this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.
Earnings ESP: Merck’s Earnings ESP is -2.71% as the Zacks Consensus Estimate is $1.62 and the Most Accurate Estimate is pegged lower at $1.58 per share. 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.
Stock to Consider
Here is a large drug stock that has the right combination of elements to beat on earnings this time around
Zacks' Top Picks to Cash in on Artificial Intelligence
In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create ""the world's first trillionaires."" Zacks' urgent special report reveals 3 AI picks investors need to know about today.
Image: Shutterstock
Merck (MRK) to Report Q1 Earnings: What's in the Cards?
Merck (MRK - Free Report) will report first-quarter 2021 results on Apr 29 before market open. In the last-reported quarter, the company delivered a negative earnings surprise of 2.94%.
The large drugmaker’s performance has been mixed, with the company exceeding earnings expectations in three of the trailing four quarters while missing in one. The company delivered a four-quarter earnings surprise of 11.50%, on average.
Merck & Co., Inc. Price and EPS Surprise
Merck & Co., Inc. price-eps-surprise | Merck & Co., Inc. Quote
Merck’s stock has declined 4.8% this year so far against an increase of 3.1% for the industry.
Factors to Consider
Strong demand for cancer drugs is likely to have boosted sales growth in the first quarter. However, Merck expects some residual negative impacts of COVID-19 on sales of some key products, mainly vaccines, in the first quarter of 2021. Overall, reduced wellness visits and delayed procedures due to the pandemic and generic competition for legacy drugs is expected to have partially offset the growth.
In oncology drugs, Keytruda sales are likely to have been driven by continued strong momentum in the lung cancer indications and continued uptake in newer indications. However, the impact of COVID-19 on Keytruda sales remains to be seen. The Zacks Consensus Estimate for Keytruda’s sales is $4.09 billion. Alliance revenues from Lynparza and Lenvima may have contributed to higher oncology sales. Please note that Merck markets Lynparza in partnership with AstraZeneca (AZN - Free Report) .
In the hospital specialty portfolio, lower elective surgery proceduresmay have had an impact on sales of Bridion Injection. The Zacks Consensus Estimate for Bridion is $360 million.
Meanwhile, the top line is expected to reflect the impact of loss of U.S. market exclusivity for drugs like Remicade, Nuvaring and Zetiaand continued pricing pressure on the diabetes franchise (Januvia/Janumet) in the United States. Merck markets Remicade in partnership with J&J (JNJ - Free Report) .
In the vaccines portfolio, sales of Gardasil vaccines in the fourth quarter benefited from CDC stockpile replenishment and the initial borrowing in the fourth quarter of 2019. These one-time benefits were absent in the first quarter of 2021. Meanwhile, the pandemic may have hurt sales in the quarter. The Zacks Consensus Estimate for Gardasil is $1.31 billion.
The Animal Health franchise is likely to have seen strong sales growth driven by higher demand.
Key Recent Development
In April, Merck announced discontinuation of the development of its investigational biological therapeutic, MK-7110 (formerly known as CD24Fc), for treating hospitalized patients with COVID-19 as the drug was not expected to be available before the first half of 2022.
Instead, the company will focus on developing molnupiravir, its investigational oral antiviral for COVID-19, which it is developing in partnership with Ridgeback Biotherapeutics. In March, Merck and Ridgeback Biotherapeutics announced promising preliminary data from the ongoing phase IIa study on molnupiravir in patients infected with SARS-CoV-2 or COVID-19. Data on one secondary objective from the study showed a quicker reduction in infectious virus, as measured by vero cell line culture, in patients with symptomatic COVID-19.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Merck this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.
Earnings ESP: Merck’s Earnings ESP is -2.71% as the Zacks Consensus Estimate is $1.62 and the Most Accurate Estimate is pegged lower at $1.58 per share. 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.
Stock to Consider
Here is a large drug stock that has the right combination of elements to beat on earnings this time around
Pfizer (PFE - Free Report) has an Earnings ESP of +0.69% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Zacks' Top Picks to Cash in on Artificial Intelligence
In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create ""the world's first trillionaires."" Zacks' urgent special report reveals 3 AI picks investors need to know about today.
See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>