Many investors were working on the assumption that Merck's first-line lung cancer trial called Keynote 189 would see success in early 2018, the analyst wrote. However, the company guided to a new primary completion date for February 2019 with no clarity on any interim look timing although any interim look in 2018 will likely be successful.

In the meantime, Merck's competition could win the race to report first-line lung cancer phase 3 results first, the analyst also wrote. Specifically, Bristol-Myers Squibb Co (NYSE:BMY) is expected to report two segments of its CheckMate-227 in the first half of 2018. Roche Holding Ltd. (ADR) (OTCM: RHHBY) is also expected to report first-line lung cancer trial results in the first half of 2018 from its IMpower 150.

Finally, Merck's Keytruda update prompted the analyst to make the following revisions to his estimates:

• 2018 EPS lowered from $4.04 to $4.00.
• 2019 EPS lowered from $4.34 to $4.17.
• 2020 EPS lowered from $4.80 to $4.54.
• Long-term EPS compounded annual growth rate from 6.7 percent to 5.4 percent.

At time of publication, shares of Merck were down 4.94 percent at $55.40.