Why Merck Crashed the Market Today

What happened

Merck (NYSE: MRK) The stock was the picture of health on Thursday. The big pharma stock posted a nearly 5% gain in price, helped by a first-quarter earnings report that was well received by investors.

So what

Merck revealed that it had revenue of $15.9 billion for the period, a solid 50% year-over-year increase. Non-GAAP net income (adjusted) rose again, rising 84% to more than $5.4 billion, or $2.14 per share.

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Both positions were well above the average analyst estimate. Tipsters tracking Merck shares had modeled just over $14.7 billion in revenue and $1.83 in adjusted net earnings per share.

In the earnings release, Merck quoted its CEO, Robert Davis, as saying that “the strong first quarter performance was driven by significant clinical advances in our research pipeline and effective commercial execution across a broad spectrum of key growth drivers”.

Now what

Davis also noted that “we remain focused on driving our science-led strategy and are confident in the sustainability of our growth prospects.”

Merck clearly believes this means better than expected growth is in the cards. It raised and tightened its forecast for revenue and profitability for the whole of 2022.

The new sales projection for the year is $56.9 billion to $58.1 billion. If achieved, it would mean an improvement of at least 17% over the 2021 figure. As for adjusted earnings per share, they should be between $7.24 and $7.36, or at least 20% more than last year’s $6.02.

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Eric Volkman has no position in the stocks mentioned. The Motley Fool has no position in the stocks mentioned. The Motley Fool has a disclosure policy.

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