Merck stock reversed higher Thursday, though the company reported another quarter of light sales for its human papillomavirus vaccine, Gardasil.
Gardasil sales plummeted 41% to $1.33 billion, widely missing Wall Street's expectations for $1.47 billion, according to FactSet. This is the third consecutive quarter of decelerating sales for Gardasil amid lackluster demand for the HPV vaccine in China. Excluding China, sales grew 14%, or 16% excluding the impact of exchange rates.
Merck said it paused shipments to China during the fourth quarter to help reduce inventory. The company also pulled its $11 billion guidance for 2030 Gardasil sales. The drug is Merck's second biggest moneymaker behind Keytruda and, in 2024, generated more than 10% of total sales.
"We see significant risk to the Gardasil franchise, as China woes continue, Japan catch-up vaccination is expected to slow and ACIP seems to favor a single-dose approach," Leerink Partners analyst Daina Graybosch said in a report. ACIP, or the Advisory Committee on Immunization Practices, makes vaccine recommends under the Centers for Disease Control and Prevention.
Merck stock, which is part of the Dow Jones Industrial Average, initially fell. But shares later climbed 1.4% to close at 79.82. Shares have tumbled nearly 20% this year, far underperforming a 7% drop for the Medical-Ethical Drugs industry group.
Merck Stock: Earnings, Sales Beat
There were puts and takes across Merck's first-quarter report.
Adjusted earnings grew 7% to $2.22 per share and beat expectations for $2.13. Sales slipped 2% to $15.53 billion, though that beat projections for $15.35 billion. Excluding the impact of exchange rates, sales rose 1%.
But Keytruda sales came in light. The blockbuster cancer drug generated $7.21 billion in revenue, growing 4% on a strict, as-reported basis and 6% in constant currency. Analysts called for a higher $7.39 billion from Keytruda. But this appears to be an inventory timing issue at wholesalers, Edward Jones analyst John Boylan said in a client note.
Januvia, though, managed to turn around a 12-quarter losing streak. Sales of the diabetes drug rose 19% — or 21% in constant currency — to $796 million. Merck credited higher net pricing in the U.S. for Januvia's sales rebound.
Winrevair, Merck's new treatment for pulmonary arterial hypertension, or PAH, brought in $280 million in sales, blowing away estimates for $243 million. PAH is a condition that causes high blood pressure in the lungs. Leerink's Graybosch noted Merck added 1,400 new patients in the quarter. The company is also studying Winrevair in patients with other types of heart disease.
"We believe Winrevair is likely to see continued uptake and investor enthusiasm," she said.
$200 Million In Tariffs-Tied Costs
For the year, Merck reiterated its guidance for $64.1 billion to $65.6 billion in sales. But the firm lowered its adjusted earnings outlook to $8.82 to $8.97 per share, citing tax charges and a license agreement. The outlook includes an estimated $200 million in additional costs due to tariffs.
The tariffs, as they stand, will be recorded in cost of sales, negatively impacting Merck's gross margin.
"At this early stage, it appears that tariff impacts may be manageable," Edward Jones' Boylan said. But Graybosch, the Leerink analyst, noted there are other concerns under the Trump administration, including potential Food and Drug Administration delays and shifts in Medicare pricing.
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