Health and Healthcare

What to Watch When Merck and Pfizer Report Early on Tuesday

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Pfizer Inc. (NYSE: PFE) and Merck & Co. Inc. (NYSE: MRK) are each scheduled to release their second-quarter financial results before the markets open on Tuesday. These are just a couple of the Dow Jones industrials that are reporting this week, but they make up half of the health care sector within the Dow.

Pfizer consensus estimates are $0.75 in earnings per share (EPS) and $13.4 billion in revenue. The same period of last year reportedly had $0.81 in EPS and $13.47 billion in revenue.

It was announced early on Monday that Pfizer’s Upjohn business would merge with Mylan. Under the terms of the agreement, which is structured as an all-stock transaction, each Mylan share would be converted into one share of the new company. Pfizer shareholders would own 57% of the combined new company and Mylan shareholders would own 43%.

Upjohn will bring brands, such as Lipitor (atorvastatin calcium), Celebrex (celecoxib) and Viagra (sildenafil), as well as proven commercialization capabilities, including leadership positions in China and other emerging markets, to this new firm.

The new company is expected to have pro forma 2020 revenues of $19 billion to $20 billion. Pro forma 2020 adjusted EBITDA is anticipated to be in the range of $7.5 billion to $8.0 billion, including phased synergies of roughly $1 billion annually to be realized by 2023.

As for Merck, analysts are looking for $1.16 in EPS and $10.96 billion in revenue. In the same period of last year, the pharmaceutical giant said it had $1.06 in EPS and $10.46 billion in revenue.

Merck recently had its first investor day in years. Merck’s Phase 3 pipeline, which will have the shortest timeline to producing revenues (that is, if the drugs are approved), are in areas such as bacterial pneumonia, heart failure, mesothelioma and just about every form of cancer. Merck’s Phase 2 pipeline includes many cancers, as well as diabetes, HIV, schizophrenia and more.

On Keytruda, Merck recently announced that the U.S. FDA approved an expanded use for Keytruda as a monotherapy in patients whose tumors express PD-L1 or in combination with platinum and fluorouracil for the first-line treatment of patients with metastatic or with unresectable, recurrent head and neck squamous cell carcinoma. Merck’s revenues from Keytruda climbed to $2.15 billion in the fourth quarter of 2019 alone.

Merck also previously squashed the idea that it was in the market for a mega-merger similar to the Bristol-Myers acquisition of Celgene for more than $70 billion. That said, Merck recently announced that it had entered into a definitive agreement to acquire Tilos Therapeutics for a sum of up to $773 million for its targets in cancer, fibrosis and autoimmune diseases.

Shares of Merck traded up about 1% on Monday to $82.23, in a 52-week range of $63.53 to $87.07. The consensus price target is $92.14.

Pfizer traded down about 2%, at $42.19 a share. The 52-week range is $38.14 to $46.47, and the consensus price target is $45.75.


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