Here's What to Expect From Merck & Co.'s Next Earnings Report

Merck & Co., Inc. (MRK), headquartered in Rahway, New Jersey, is a major player in healthcare. Specializing in pharmaceuticals, vaccines, and animal health, Merck is committed to delivering innovative medicines and therapies that improve health worldwide. With a market cap of $279.7 billion, the company is set to release its Q3 earnings report before the market opens on Thursday, Oct. 31.

Ahead of the event, analysts expect MRK to report a profit of $1.59 per share, down 25.4% from $2.13 in the year-ago quarter. The company has consistently beaten Wall Street's earnings estimates in the last four quarters. 

Its adjusted earnings of $2.28 per share for the last quarter surpassed the consensus estimate by 5.6%. Merck's Q2 beat was driven by strong Keytruda sales and growth in oncology, cardiovascular, and vaccines, offsetting weaker diabetes and virology performance.

For fiscal 2024, analysts expect MRK to report EPS of $7.85, up 419.9% from $1.51 in fiscal 2023.  

MRK stock is up 1.3% YTD, significantly underperforming the broader S&P 500 Index's ($SPX) 22.5% gains and the Health Care Select Sector SPDR Fund's (XLV) 12.4% gain over the same time frame.

Merck's underperformance is mainly due to heightened competition in the diabetes drug market and challenges driving revenue growth. Although the company exceeded earnings expectations for Q2, its shares dropped 9.8% on July 30, driven by lower-than-expected sales of the Gardasil vaccine, impacted by shipment delays in China. Merck's lowered adjusted profit guidance, accounting for one-time charges from recent acquisitions, also fueled investor concerns.

However, the consensus opinion on MRK stock is optimistic, with an overall “Strong Buy” rating. Of 25 analysts covering the stock, 23 advise a “Strong Buy” rating, and two indicate a “Hold.”

MRK's average analyst price target is $140.39, suggesting a potential upside of 27.1% from the current levels.

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On the date of publication, Rashmi Kumari did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.