Merck & Company quickly lost about 4% of its market value in the pre-market trading on July 30, to re-test its major $120 to $122.50 technical support area. This was an immediate response to the drug giant's updating its own earnings forecast for the rest of the year. Merck CEOs adjusted their guidance to a range between $7.94 and $8.04, from previous estimates of $8.53 to $8.65 per share. Yet, the main reasons for lower forecasts were seemingly boiling down to one-time charges from an acquisition of eye-focused drug developer EyeBio, which cost nearly $1.3 billion, or $0.51 per share. Consensus expectations at $8.16 per share included this factor into consideration, and so nothing extraordinary happened from our point of view.
Meanwhile, Merck business continued to win. Keytruda medicine for cancer immunotherapy, which used to make the largest revenue contribution, jumped above $30 billion annually, hitting $7.3 billion in the quarter, up 16% YoY vs expected numbers of slightly above $7.1 billion. Besides, Merck launched a drug Winrevair for a rare lung condition called pulmonary arterial hypertension. Many feel Winrevair may have a blockbuster potential, as it already gave $70 million in sales, which is higher than the most bullish estimates. Sales of Gardasil, a vaccine widely used in the prevention of human papillomavirus, were also growing. The company's boss Robert Davis separately emphasized Merck's participation in vaccine programs, including the US FDA regulatory approval and CDC's (The Centers for Disease Control and Prevention) recommendation for a pneumococcal vaccine, and positive results from a trial of an investigational RSV (respiratory syncytial virus) preventative monoclonal antibody for infants.
From a pure financial point of view, the company raised its full-year 2024 sales projections to a slightly higher range of $63.4 billion to $64.4 billion. Merck's sales globally rose by 7% to $16.1 billion, above average expectations of $15.8 billion, sales added 11% if the Wall Street crowd takes into account adjusting for currency exchange impacts. On Tuesday Merck also revealed $5.5 billion of Q2 profit, or $2.14 per share. Excluding this one-time stuff, the last quarter brought $2.28 per share vs consensus expectations of $2.15. The outlook looks so strong, that any current price discount is just an opportunity to add more to investors' stake in Merck. Merck is surely a top pick, even though not a buy for immediate use, better to postpone for a week or so until the dust settles.
