Merck MRK reported first-quarter 2025 adjusted earnings per share (EPS) of $2.22, which beat the Zacks Consensus Estimate of $2.15. Earnings rose 7% year over year on a reported basis and 12% excluding foreign exchange (Fx). This upside was primarily driven by a one-time charge incurred by the company in the year-ago quarter for the acquisition of Harpoon Therapeutics, which was completed in March 2024.
Revenues declined 2% year over year (up 1% excluding Fx) to $15.53 billion. Sales also beat the Zacks Consensus Estimate of $15.39 billion. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
All sales growth numbers discussed below are on a year-over-year basis and exclude Fx impact.
Soft Sales Performance of MRK’s Keytruda
Merck’s flagship product, Keytruda, generated sales of $7.21 billion in the quarter, up 6%. Sales of the drug benefited from rapid uptake across earlier-stage indications in triple-negative breast cancer, renal cell carcinoma and non-small cell lung cancer. Continued strong momentum in metastatic indications also boosted sales growth. Keytruda sales missed the Zacks Consensus Estimate of $7.55 billion and our estimate of $7.82 billion, likely due to the unfavorable timing of wholesaler purchases in the United States.
Alliance revenues from Lynparza and Lenvima also boosted oncology sales in the quarter. Merck has a deal with British pharma giant AstraZeneca AZN to co-develop and commercialize PARP inhibitor Lynparza and a similar one with Japan’s Eisai for its tyrosine kinase inhibitor, Lenvima.
Alliance revenues from AstraZeneca-partnered Lynparza increased 8% to $312 million in the quarter, driven by higher global demand for the drug. Lenvima alliance revenues totaled $258 million, up 2%.
Welireg recorded sales of $137 million, up 63%. The drug’s sales benefited from higher demand in the United States.
Sales Performance of MRK’s Other Key Products
In vaccines, sales of HPV vaccines — Gardasil and Gardasil 9 — fell 40% to $1.33 billion due to lower demand in China, partially offset by higher sales in most international markets. The reported sales figure met the Zacks Consensus Estimate but beat our estimate of $1.28 billion.
Proquad, M-M-R II and Varivax vaccines recorded combined sales of $539 million, down 5%. Sales of the rotavirus vaccine, Rotateq, rose 7% to $228 million, while Pneumovax 23 (pneumococcal vaccine polyvalent) vaccine sales declined 30% to $41 million. Sales of the pneumococcal 15-valent conjugate vaccine Vaxneuvance rose 7% to $230 million, primarily driven by higher demand in ex-U.S. markets.
Capvaxive, Merck’s recently launched pneumococcal 21-valent conjugate vaccine, generated sales worth $107 million compared with $97 million in the previous quarter.
In the hospital specialty portfolio, neuromuscular blockade medicine, Bridion injection, generated sales of $441 million in the quarter, up 1%. While the drug’s sales benefited from higher demand and pricing in the United States, it was offset by the generic competition in certain ex-U.S. markets (mainly Europe and Japan).
In Diabetes, Januvia/Janumet franchise sales rose 21% year over year to $796 million. Sales benefited from higher net pricing in the United States, partially offset by generic competition in certain international markets.
New PAH drug Winrevair, which received FDA approval in March 2024, generated sales of $280 million compared with $200 million in the previous quarter.
Sales of Lagevrio (molnupiravir) declined 69% to $102 million in the quarter.
MRK’s Animal Health Segment
The segment generated revenues of $1.59 billion, up 5% year over year (10% excluding Fx impact). This growth was driven by higher demand for livestock products and the inclusion of sales from the Elanco aqua business acquired last year. While this reported metric missed the Zacks Consensus Estimate of $1.61 billion, it was in line with our model estimate.
MRK’s Cost and Margin Discussion
Adjusted gross margin was 82.2%, up 100 basis points year over year, driven by a favorable product mix.
Adjusted selling, general and administrative expenses were $2.53 billion in the reported quarter, up 3% year over year, as higher promotional and selling costs were partially offset by the favorable impact of Fx.
Adjusted research and development spending was $3.61 billion, down 9% from the year-ago quarter levels. This decline was mainly backed by lower charges for business development activity and the favorable impact of Fx in the quarter.
MRK’s 2025 Guidance
Merck maintained its sales guidance for the year. It expects revenues to be in the range of $64.1-$65.6 billion. This guided range now includes a revised negative impact on sales from Fx of around 1% versus the prior estimate of 2%.
The adjusted gross margin is expected to be around 82%, down 50 basis points from the prior guidance of 82.5%. This downgrade is mainly to account for the negative impact of Trump’s tariffs, which Merck expects will lead to incremental costs of approximately $200 million (to be primarily recorded in ‘Cost of Sales’).
Merck adjusted its operating expense and adjusted EPS guidance for the full year, which was expected. This revision accounts for a one-time charge of $200 million payable as an upfront payment to China-based Hengrui Pharma for in-licensing the latter’s investigational oral Lp(a) inhibitor, HRS-5346.
Adjusted EPS is expected to be between $8.82 and $8.97 versus the prior estimated range of $8.88-$9.03. This guidance includes a one-time net charge of six cents per share related to the above transaction.
Adjusted operating costs are expected to be in the range of $25.6 to $26.6 billion (previously: $25.4-$26.4 billion). The adjusted tax rate is now expected to be around 15.5% to 16.5%, versus the prior guidance of 16% to 17%.
Our Take on MRK’s Results
Merck delivered encouraging Q1 results, with both earnings and sales beating estimates. While Keytruda's soft sales performance raised some eyebrows, it was due to timing issues in U.S. wholesaler purchases and not a drop in underlying demand. Robust sales of Januvia/Janumet, along with solid contributions from newer launches like Capvaxive and Winrevair, helped offset the shortfall.
Shares of Merck were trading higher in the pre-market today, likely fueled by the better-than-expected earnings results.
Yet, the stock has lost 21% year to date compared with the industry’s nearly 3% fall.
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Though Keytruda continues to be Merck’s biggest strength and a solid reason to own the stock, the looming loss of exclusivity in 2028 highlights the company’s heavy reliance on the drug. Meanwhile, Gardasil — the company’s second-largest product — is seeing sluggish sales in China, adding to near-term challenges.
Merck seems to be aware of these concerns and is taking steps to diversify. To build its long-term portfolio, the company is also tapping external sources. MRK’s late-stage pipeline has almost tripled over the past three years, positioning it to launch several new vaccines and drugs with blockbuster potential over the next five years. In the past few months, the company has been seen tapping Chinese biotechs for access to newer drugs at more attractive valuations.
MRK’s Zacks Rank
Merck currently has a Zacks Rank #3 (Hold).
Merck & Co., Inc. Price
Merck & Co., Inc. Price
Merck & Co., Inc. price | Merck & Co., Inc. Quote
Our Key Picks Among Biotech Stocks
A couple of better-ranked stocks are ANI Pharmaceuticals ANIP and CytomX Therapeutics CTMX. While ANIP sports a Zacks Rank #1 (Strong Buy) at present, CTMX carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, estimates for ANI Pharmaceuticals’ 2025 earnings per share (EPS) have risen from $5.54 to $6.36. EPS estimates for 2026 have increased from $6.75 to $7.14 during the same period.
ANI Pharmaceuticals’ earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 17.32%.
In the past 60 days, estimates for CytomX Therapeutics’ 2025 EPS have improved from a loss of 31 cents to a profit of 32 cents. During the same timeframe, estimates for 2026 loss per share have narrowed from 65 cents to 45 cents.
CytomX Therapeutics’ earnings beat estimates in three of the trailing four quarters and missed the mark once, delivering an average surprise of 180.70%.
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