Keytruda, COVID-19 Hopes Prompt Merck Earnings Beat, Rosy Outlook

By Chris Lange Published Jul 31, 11:18AM EDT

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Keytruda, COVID-19 Hopes Prompt Merck Earnings Beat, Rosy Outlook — © Erik S. Lesser / Getty Images

When Merck & Co. (NYSE: MRK | MRK Price Prediction) reported its second-quarter financial results before the markets opened on Wednesday, the pharmaceutical giant said that it had earnings per share (EPS) of $1.37 and $10.9 billion in revenue. That compared with consensus estimates of $1.04 in EPS and $10.39 billion in revenue. The same period of last year reportedly had $1.30 in EPS and $11.76 billion in revenue.

Merck has a few irons in the COVID-19 fire, and it is accelerating two vaccine development efforts and a novel antiviral candidate. The company has a collaboration with the International AIDS Vaccine Initiative for developing a vaccine, and it acquired Themis, which has a vaccine candidate as well. Separately, Merck has a collaboration with Ridgeback Bio for a COVID-19 antiviral treatment.

In terms of the numbers, worldwide sales decreased by 8%, or 5% excluding foreign exchange. This was largely driven by Keytruda sales increasing 29% year over year to $3.4 billion.

Animal Health sales totaled $1.1 billion for the second quarter, a decrease of 2% compared with the second quarter of last year. Excluding the unfavorable effect from foreign exchange, Animal Health sales grew 3%. Performance in livestock products reflects lower demand driven by reduced protein and milk demand due to restaurant and school closures resulting from the COVID-19 pandemic.

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Looking ahead to the 2020 full year, Merck expects to see earnings of $5.63 to $5.78 per share and revenue between $47.2 billion and $48.7 billion. Consensus estimates call for $5.31 in EPS and $47.33 billion in revenue for 2019.

Management noted that it remains confident that Merck will drive strong long-term growth based on underlying demand for its unique portfolio of innovative medicines, vaccines and animal health products.

Merck stock traded up about 1% at $80.11 on Friday, in a 52-week range of $65.25 to $92.64. The consensus price target is $93.00.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.