Health and Healthcare

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

Chris Lange

Published: July 31, 2020 11:18 am

When Merck & Co. (NYSE: MRK) 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.

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.