Merck stock popped Thursday after the Dow Jones stalwart topped Wall Street's first-quarter views on the back of its cancer treatment "star," Keytruda.
Revenue from the immuno-oncology drug surged 20% on a strict, as-reported basis to $6.95 billion. That was well above expectations for $6.71 billion, according to FactSet. Excluding the impact of exchange rates, sales soared 24%.
Doctors are now using Keytruda in earlier-stage patients, including triple-negative breast cancer and kidney cancer, as well as continued approvals in metastatic conditions, Edward Jones analyst John Boylan said in a report. He described Keytruda as the "star" of Merck's report.
"We expect that to continue due to growing acceptance of the drug and good clinical data," he said.
On today's stock market, Merck stock jumped 2.9% to 130.71. Shares recently hurdled their 50-day moving average, according to MarketSurge. But Merck stock remains narrowly below its record high at 133.10, achieved on March 27.
Merck Stock: Sales, Earnings Beat
Overall, sales climbed 9% to $15.8 billion, topping expectations for $15.21 billion. Merck noted that the devaluation of the Argentine peso had a 2% impact on sales. Minus that factor, total revenue grew 12% and pharmaceutical sales advanced 13%.
On an adjusted basis, earnings came in at $2.07 per share. Earnings crushed forecasts for $1.90 and grew almost 48%.
Merck has yet to notch any revenue from its new drug, Winrevair. The Food and Drug Administration approved Winrevair for patients with pulmonary arterial hypertension, or PAH, last month. PAH is a form of high blood pressure in the lungs. Merck bought the drug's maker for $11.5 billion in 2021.
Edward Jones' Boylan says Winrevair should help add to future sales thanks to a broad label with few side effect warnings. Analysts polled by FactSet expect Winrevair to generate $572 million in sales this year, growing to $1.33 billion in 2025 and $2.06 billion in 2026.
"Merck has a solid pipeline of other new products and has an impressive management team," Boylan said. "We do not believe this positive outlook is reflected in the price of the shares."
Cancer Drugs, Vaccines Drive Growth
Cancer treatments and vaccines helped stoke first-quarter sales growth, Merck said in its release. But the company's diabetes drugs are still facing some headwinds.
Sales of human papillomavirus vaccine Gardasil jumped 14% to $2.25 billion. That narrowly topped Merck stock analysts' calls for $2.24 billion. But revenue from diabetes treatment Januvia skidded 24% to $670 million and missed forecasts for $687 million.
For the year, Merck now expects $63.1 billion to $64.3 billion in sales and adjusted profit of $8.53 to $8.65 per share. Analysts projected $63.81 billion in sales and $8.56 earnings per share.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
