Merck Shares Tumble Following Mixed Q4 Results and Weak 2025 Guidance

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Shares of Merck & Co. Inc. (NYSE: MRK) fell sharply on Tuesday, February 4, 2025, dropping over 8% in pre-market trading after the pharmaceutical giant reported mixed fourth-quarter results and issued disappointing guidance for the year ahead.

The stock decline reflects investor concerns over missed earnings expectations and lower-than-anticipated projections for 2025.

Q4 Earnings Performance

Merck reported adjusted earnings per share (EPS) of $1.72 for the fourth quarter of 2024, falling short of analysts’ consensus estimate of $1.81 by $0.09. However, the company posted quarterly revenue of $15.6 billion, exceeding expectations and marking a 7% year-over-year increase.

This growth was driven by strong demand for its blockbuster cancer drug Keytruda, which saw an 18% increase in annual sales.

2025 Guidance Disappoints

The company’s outlook for 2025 has raised concerns among investors. Merck forecasted full-year adjusted EPS between $8.88 and $9.03, below the consensus estimate.

Similarly, projected revenue for the year is expected to range between $64.1 billion and $65.6 billion, falling short of analysts’ expectations.

The weaker guidance reflects several challenges, including a temporary pause in shipments of its HPV vaccine Gardasil/Gardasil 9 to China starting February 2025 through mid-year, as well as broader market pressures.

CEO Commentary

Robert M. Davis, Merck’s chairman and CEO, highlighted the company’s strong performance in 2024, with worldwide sales increasing by 7% to $64.2 billion.

He attributed this growth to robust demand for Keytruda, the successful launch of Winrevair, and strength in Merck’s Animal Health business. However, Davis acknowledged the challenges ahead, particularly regarding Gardasil shipments and competitive pressures.

Market Reaction

The stock’s sharp decline underscores investor unease about the company’s ability to meet growth expectations amid these headwinds.

Despite solid revenue growth and continued success with Keytruda, the combination of missed earnings estimates and lowered guidance has weighed heavily on market sentiment.

Merck’s performance will be closely watched as it navigates these challenges in the coming year while continuing to focus on innovation and expanding its portfolio globally.

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