Merck stock trails market as 2025 guidance disappoints, largely due to China

MRK stock sold off more than 10% during Tuesday's session.
Merck reported Q4 sales and profit that beat Wall Street consensus.
2025 guidance was at least ~$2 billion below consensus.
Shipments of Gardasil to China and a milestone payment on LM-299 are culprits.

Clay Webster FXStreet

Merck (MRK) stock sank like a stone on Tuesday after the pharmaceutical giant posted poor guidance for the rest of the year. Shares of the New Jersey-based maker of oncology best-seller Keytruda fell over 10% mid-session despite the company posting beats on the top and bottom lines in the fourth quarter.

The Dow Jones Industrial Average (DJIA), which holds Merck as a constituent, rose after a morning pullback. China responded to the Trump administration’s 10% tariff on its imports with its own smaller tariff package on US coal and other goods. China also opened an antitrust case into Alphabet (GOOGL), the timing of which is viewed as part and parcel of the trade war, in addition to reopening a prior case on Nvidia.

Merck earnings news: Q4 beats, but 2025 guidance hurts

Merck management provided shareholders with 2025 guidance for between $64.1 billion and $65.6 billion in full-year sales. This range was noticeably below the Wall Street consensus for roughly $67.4 billion.

Likewise, guidance for earnings per share (EPS) of $8.88 to $9.03 missed the $9.21 consensus by a significant margin.

In its own earnings release on Tuesday morning, fellow pharma giant Pfizer (PFE) also gave guidance that slightly underperformed market expectations. Most pharma stocks have been in retreat since Donald Trump selected vaccine and pharma sceptic Robert F. Kennedy, Jr. as his top health nominee.

But Merck’s fourth-quarter was quite successful. It reported adjusted EPS of $1.72, which was $0.04 ahead of consensus. Revenue of $15.62 billion was more than $100 million above the average projection.

Management partially blamed a one-time charge of about $0.09 per share related to a milestone payment to partner LaNova. The latter Chinese company is the developer of LM-299, a bispecific antibody used to treat cancer progression, which Merck markets globally.

Another factor in the reduced profit outlook is that Merck is pausing sales of its HPV vaccine Gardasil to China through the middle of the year.

Merck earnings news

Merck stock has moved back to the early October lows of last fall. MRK stock did recover somewhat toward the end of Tuesday's session, but shares are now trending well below moving averages.

The real support appears to stem from the middle of 2022 when the $83 to $85 zone saw a lot of volume. Buyers will likely wait until MRK descends to this level before picking up shares.

MRK weekly stock chart

Author

Clay Webster

FXStreet

Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.

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