Merck stock surged within a buy zone Thursday after the pharma giant notched a third-quarter beat on particularly strong performances from Keytruda and Gardasil.
Revenue from blockbuster cancer drug Keytruda soared 20% during the quarter, leading a 15% jump for Gardasil, a human papillomavirus vaccine. The base business performed so well that Merck raised its outlook for 2022. The guidance boost comes despite exchange-rate headwinds and a 22-cent hit to per-share earnings from a recent collaboration with Moderna on a treatment for melanoma.
"Strength of core franchises makes me think 2023 estimates will be going up," Evercore ISI analyst Umer Raffat said in a report.
On today's stock market, Merck stock rose 1.4% to close at 99.74. That pushed shares toward the high end of a buy zone from 95.82-100.61, according to MarketSmith.com.
Merck Stock: Lagevrio Adds To Growth
During the third quarter, Merck earnings climbed 4% to $1.85 per share, on an adjusted basis. That topped Merck stock analysts' call for $1.72, FactSet shows.
Sales advanced 14% to $14.96 billion, above expectations for $14.07 billion. In constant currency, sales jumped 18%. The Covid-19 pill Lagevrio, from a Merck partnership with Ridgeback Therapeutics, generated $436 million in revenue. Excluding its contribution, Merck's total revenue rose 10%.
In a note to clients, Edward Jones analyst John Boylan said the quarter "was even better than meets the eye." He added that growth from Keytruda and Gardasil should continue as Merck expands the treatment uses for the former and as Gardasil reaches new geographies.
For the year, Merck now expects $58.5 billion to $59 billion in sales. Three months ago, Merck said it expected a midpoint of $58 billion for the year. Merck stock analysts forecast $58.49 billion.
The company also raised its earnings outlook to $7.32-$7.37 per share vs. expectations for $7.34.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
