Merck spooked investors on Thursday with a guidance cut after sales of its diabetes drugs and HPV vaccine lagged third-quarter forecasts. Merck stock hit a nearly two-year low.
During the third quarter, sales of diabetes medicines Januvia/Janumet declined 11% to $482 million, widely missing expectations for $610 million. Revenue from human papillomavirus vaccine Gardasil also tumbled 42% on a strict, as-reported basis to $2.31 billion. Analysts called for a stronger $2.49 billion, according to FactSet.
Merck cited competition that undercut Januvia/Janumet, while lower demand in China hammered away at sales of Gardasil.
Merck lowered its sales view for the year by $5 million at the midpoint. The company also trimmed its earnings outlook due to a one-time hit related to business development.
Merck stock tumbled 2.5% to close at 102.26. Shares topped out at 134.63 in late June this year, but have since fallen more than 24%.
Merck Stock: Sales And Profit Beat Expectations
It's not all gloomy for Merck, however. Across all products, sales edged up 4% to $16.66 billion. Excluding the impact of exchange rates, sales climbed 7%. Analysts called for a lower $16.47 billion in sales.
On an adjusted basis, Merck reported $1.57 earnings per share. Profit tumbled 26% — or 23% in constant currency — but beat expectations for $1.48.
The third-quarter beat "was driven by better-than-anticipated revenue growth in the oncology portfolio, which counterbalanced the declines in diabetes and the mixed performance in vaccines," CFRA analyst Sel Hardy said in a report.
Keytruda, Merck's bread-and-butter cancer treatment, generated a hefty portion of sales at $7.43 billion. That accounted for roughly 45% of sales. Keytruda sales surged 17%, or 21% in constant currency, and topped projections for $7.31 billion.
The company's new treatment for high blood pressure in the lungs, Winrevair, brought in $149 million in sales. That more than doubled sequentially and topped expectations for $127 million. Winrevair is only two quarters into its launch. It treats pulmonary arterial hypertension, or PAH.
Company Cuts Profit Outlook
The company narrowed its sales estimate for the year and now expects $63.6 billion to $64.1 billion. The midpoint is $5 million below Merck's prior guidance. Analysts called for $64.14 billion in sales this year.
Merck also cut its earnings outlook, reflecting a 24-cent negative hit due to business development transactions. Now, the company forecasts earnings of $7.72 to $7.77. Merck stock analysts projected $7.75 per share.
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