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HomeMarketMerck Reports Earnings Thursday. What to Expect.

Merck Reports Earnings Thursday. What to Expect.

Merck reports earnings on Thursday morning.

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On a busy morning for big pharma earnings on Thursday, investors will be watching to see how
‘s guidance for its 2023 financial performance lines up with expectations.

Guidance for the coming year has been the key story of pharmaceutical companies’ earnings season so far. Last week,
Johnson & Johnson
(ticker: JNJ) issued guidance that was higher than Wall Street expected, despite signals from its CEO that the company was uncertain on the broader economic picture. On Tuesday,
‘s (PFE) 2023 guidance came in below Wall Street expectations, a miss the company attributed to analysts not understanding how sharply Covid-19 vaccine sales will fall.

Thursday is
‘s (MRK) turn, along with
Bristol Myers Squibb
Eli Lilly
(LLY), and, after the market closes,
Sciences (GILD).

In addition to broader questions around the economic environment, Merck faces dropping demand for its Covid-19 antiviral Lagevrio. In early January, Merck CEO Robert Davis said the company expected to have sold between $5.2 billion and $5.3 billion worth of Lagevrio in 2022, but that the drug’s sales would be “meaningfully less than that” in 2023.

“We are confident you’re going to see good growth, and you’re going to see margin expansion,” Davis said at the time of Merck’s 2023 prospects.

Analysts expect Merck to earn $7.33 per share in 2023, on sales of $57.9 billion. Merck shares performed extraordinarily well in 2022, climbing 44.8% while the broader
S&P 500
fell 19.4%.

For the fourth quarter of 2022, analysts expect Merck to report earnings of $1.53 per share, and sales of $13.7 billion, according to FactSet. 

Like other big pharma stocks, Merck shares have pulled back in the first month of 2023. Merck shares are down 3.6% this year, while the S&P 500 Pharmaceuticals industry group is down 5.6%, and the broader S&P 500 has climbed 7.3%.

That weak performance has been despite positive news for the company. Merck announced on Jan. 27 that the Food and Drug Administration had approved the company’s cancer drug Keytruda as an early-stage, so-called adjuvant treatment following surgery for patients with a form of non-small cell lung cancer.

Roche Holding
‘s (RHHBY) Tecentriq was the only drug of Keytruda’s type approved in the indication. Cowen analyst Steve Scala wrote Sunday that he expects Keytruda to see “rapid uptake” in those patients.

Scala wrote that he expects $960 million in Keytruda sales in the adjuvant non-small cell lung cancer setting in 2027.

However, Keytruda, the company’s top-selling drug, also represents a worry for Merck, and for investors. The drug could face competition from biosimilars as soon as 2028. At an investor conference hosted by J.P. Morgan in early January, Davis said he was confident in the company’s ability to get past that loss of exclusivity.

“We continue to aspire to grow through the LOE of Keytruda,” Davis said. “We’ll see whether we’re able to do that. We’ve got more work to do. At a minimum, I’m quite confident that we are making meaningful progress in both lessening the impact and shortening the time before we will definitely be back to strong growth into the next decade.”

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com

Credit: marketwatch.com

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