Merck stock skidded Tuesday on full-year guidance that lagged Wall Street's expectations despite a strong second-quarter showing from cancer treatment blockbuster Keytruda.
For the year, the pharma stalwart narrowed its sales outlook and now expects $63.4 billion to $64.4 billion. Merck also cut its adjusted earnings outlook by 60 cents at the midpoint, to $7.94 to $8.04 per share. Analysts were expecting earnings of $8.16 a share and sales of $64.29 billion.
The company noted 51 cents of the earnings cut reflects the impact of its acquisition of Eyebiotech Limited.
Edwards Jones analyst John Boylan says there wasn't anything that changes his positive long-term view on Merck.
"Costs may be a little higher than we forecast for the year," he said in a client note. "However, since we believe this was mostly due to acquisition impacts and the negative impact of foreign currency, it does not concern us much."
But on today's stock market, Merck stock plunged 9.8% to 115.25. Shares closed well below their 50-day moving average, according to MarketSurge.
Merck Stock: Sales And Earnings Beat
Overall, Merck's adjusted earnings reversed from a year-earlier loss to $2.28 per share, beating the Street's forecast for $2.16. Sales also topped expectations at $16.11 billion, up 7% year over year.
But the lion's share of the beat came from Keytruda. Keytruda sales surged 16% to $7.27 billion and walloped expectations for $6.77 billion, according to FactSet.
Sales from Gardasil, a human papillomavirus vaccine, came up short at $2.48 billion and grew just 1%. Further, the animal health division lagged forecasts at $1.48 billion, up 2%. Boylan, the Edward Jones analyst, said he expected the light Gardasil quarter due to lower demand in China.
Notably, Winrevair, Merck's new treatment for pulmonary arterial hypertension beat expectations with $70 million in sales. Analysts called for $56.5 million in sales. Pulmonary arterial hypertension is a form of high blood pressure in the lungs. Winrevair treats the underlying cause of it.
"This is promising and it gives us confidence in our long-term forecast for this drug," Boylan said.
He maintained his buy rating on Merck stock.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
