Merck stock tumbled amid a broad pharma turndown Thursday even though the company racked up more than $5 billion in sales for its blockbuster cancer drug, Keytruda.
The heavyweight cancer med, which accounts for more than a third of Merck's total revenue, brought in $5.25 billion in June-quarter sales. Its Ridgeback Biotherapeutics-partnered Covid pill, Lagevrio, generated $1.18 billion in sales. Excluding Lagevrio, overall sales rose 18%.
"This was a strong quarter for Merck, with top drug Keytruda growing 26% compared with last year, and Lagevrio contributing significantly to growth," Edward Jones analyst Ashtyn Evans said in a note.
But Merck stock fell 1.4% to 89.94 on today's stock market after Senate Democrats reached a deal they say will lower drug costs, cut carbon emissions and chip away at the federal deficit. That led Investor's Business Daily's industry group of pharmaceutical stocks to dip a fraction.
Merck Stock: Adjusted Profit Skyrockets
Overall, Merck's second-quarter sales increased 28% to $14.59 billion. That easily beat analysts' call for $13.89 billion. Adjusted profit skyrocketed about 207% to $1.87 per share and was also above projections for $1.70 per share, according to FactSet.
The strongest growth came from Gardasil, Merck's human papillomavirus vaccine. Sales surged 36% to $1.67 billion. But revenue from diabetes treatment Januvia slipped 2% to $1.23 billion. Products for pets and livestock — its animal health division — generated flat sales at $1.47 billion.
Merck narrowed its adjusted earnings guidance to $7.25-$7.35 per share. That includes a negative 3% impact from exchange rates in mid-July. Merck stock analysts had a more bullish forecast at $7.38.
The company also expects $57.5 billion to $58.5 billion in sales, including $5 billion to $5.5 billion from Lagevrio. Analysts projected $58.05 billion in sales, a hair above the midpoint of Merck's prediction.
Edward Jones' Evans kept her buy rating on Merck stock.
"We believe Merck is actively looking for sizable acquisitions in the near term, which could help supplement internal growth and reduce its dependence on Keytruda," she said.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
