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Merck MRK reported fourth-quarter 2025 adjusted earnings per share (EPS) of $2.04, which beat the Zacks Consensus Estimate of $2.03. Earnings increased 19% year over year, both on a reported basis and excluding foreign exchange (Fx).
Revenues in the fourth quarter increased 5% year over year on a reported basis and 4% excluding Fx to $16.40 billion. Sales beat the Zacks Consensus Estimate of $16.19 billion.
All sales growth numbers discussed below are on a year-over-year basis and exclude Fx impact.
Merck’s flagship product, Keytruda, generated sales of $8.37 billion in the quarter, up 5%. Sales of the drug benefited from rapid uptake across earlier-stage indications and continued strong momentum in metastatic indications. Keytruda sales in the fourth quarter included $35 million in sales of Keytruda Qlex, the subcutaneous formulation of Keytruda.
Keytruda sales beat the Zacks Consensus Estimate of $8.31 billion.
Alliance revenues from Lynparza and Lenvima also aided oncology sales in the fourth 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 AZN-partnered Lynparza increased 4% to $389 million in the quarter, driven by higher demand globally. Lenvima alliance revenues totaled $272 million, up 6%.
Welireg recorded sales of $220 million, up 37%. The drug’s sales benefited from higher demand in the United States as well as continued launch uptake in certain European markets.
In vaccines, sales of HPV vaccines — Gardasil and Gardasil 9 — plunged 35% to $1.03 billion due to lower demand in China as well as lower sales in Japan. Gardasil/Gardasil 9 sales narrowly missed the Zacks Consensus Estimate of $1.04 billion.
Proquad, M-M-R II and Varivax vaccines recorded combined sales of $619 million, up 3%.
Merck’s newly launched pneumococcal 21-valent conjugate vaccine, Capvaxive, generated sales worth $279 million compared with $244 million reported in the previous quarter.
In the hospital specialty portfolio, neuromuscular blockade medicine, Bridion injection, generated sales of $499 million in the quarter, up 11%. While the drug’s sales benefited from higher demand in the United States, the gains were offset by generic competition in certain international markets.
In Diabetes, Januvia/Janumet franchise sales rose 3% year over year to $501 million. Sales of the drug were driven by higher net pricing in the United States, offset by lower demand in China and generic competition in most international markets.
New PAH drug Winrevair generated sales of $467 million, up 133% on a year-over-year basis and 29.7% on a sequential basis, reflecting continued strong uptake in the United States.
The segment generated revenues of $1.51 billion, up 8% year over year on a reported basis and 6% excluding Fx. This growth was driven by higher demand for livestock products. Sales from this segment beat the Zacks Consensus Estimate of $1.48 billion.
Full-year 2025 sales rose 1% (2% ex Fx) to $65.01 billion, surpassing the Zacks Consensus Estimate of $64.80 billion. Pharmaceutical sales grew 1% (1% excluding Fx) to $58.10 billion.
Adjusted earnings for 2025 were $8.98 per share, increasing 17% year over year on a reported basis and 19% excluding Fx. Full-year adjusted earnings beat the Zacks Consensus Estimate of $8.95 per share.
Merck issued a fresh earnings and sales outlook for 2026.
Merck expects revenues to be in the range of $65.5-$67.0 billion in 2026. The forecasted range fell short of the Zacks Consensus Estimate of $67.36 billion.
Adjusted earnings per share are expected to be between $5.00 and $5.15. The Zacks Consensus Estimate for 2026 earnings is currently pegged at $6.20 per share. The guided range also includes a one-time charge of $9 billion or $3.65 per share related to the acquisition of San Diego-based biotech Cidara Therapeutics, which closed last month.
The guidance includes a positive impact from Fx of approximately 1% on sales and around 10 cents on EPS.
The adjusted gross margin is expected to be around 82%.
Adjusted operating expenses are expected to be in the range of $35.9 billion to $36.9 billion. The adjusted tax rate is expected to be approximately 23.5% to 24.5%.
Merck delivered stronger-than-expected fourth-quarter results, beating estimates for both earnings and sales. The performance was driven by higher sales of oncology drugs such as Keytruda, strong demand in the Animal Health segment, and added contributions from recently launched products like Winrevair.
Despite the encouraging results, investors were left disappointed by the weak 2026 guidance that fell below expectations, resulting in the stock declining in pre-market trading hours on Feb. 3.
In the past six months, shares of Merck have rallied 42.4% compared with the industry’s increase 26.4%.
Keytruda sales were better than expected in the fourth quarter and drove the majority of Merck’s Pharmaceutical revenues. However, the drug is set to lose exclusivity in 2028, which is likely to keep investors worried, given the company’s heavy reliance on it. Declining sales of Gardasil also remain an overhang.
Merck’s late-stage pipeline has almost tripled over the past three years, positioning it to launch several new vaccines and drugs over the next five years, with many having blockbuster potential. To build its long-term portfolio and diversify its product lineup, management is also tapping external sources, including mergers and acquisitions.
Merck & Co., Inc. price-consensus-eps-surprise-chart | Merck & Co., Inc. Quote
Merck currently has a Zacks Rank #4 (Sell).
Some better-ranked stocks in the biotech sector are Alkermes ALKS and Castle Biosciences CSTL, both sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here
Over the past 60 days, estimates for Alkermes’ 2026 earnings per share have increased from $1.54 to $1.91. Shares of ALKS have gained 30.6% over the past six months.
Alkermes’ earnings beat estimates in three of the trailing four quarters, while missing the same on the remaining occasion, with the average surprise being 4.58%.
Over the past 60 days, Castle Biosciences’ loss per share estimates for 2026 have decreased from $1.06 to 50 cents. Shares of CSTL have surged 157.8% over the past six months.
Castle Biosciences’ earnings beat estimates in three of the trailing four quarters, while missing the same on the remaining occasion, with the average surprise being 66.11%.
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This article originally published on Zacks Investment Research (zacks.com).
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