Merck's Q1 Earnings Beat Wall Street, Adjusts 2025 Profit Outlook As Tariffs May Result In Incremental Cost Of $200 Million

Merck & Co. Inc MRK reported the first-quarter 2025 adjusted earnings of $2.22 per share, up 7% year over year (+12% on constant currency), beating the consensus of $2.14.

Merck reported quarterly sales of $15.53 billion, beating the consensus of $15.31 billion.

Sales declined 2% on a reported basis but increased 1% on a constant currency basis.

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The pharmaceutical unit booked $13.64 billion in revenue, down 3% year over year (-1% excluding exchange), driven by declines in vaccines, virology, and immunology, partially offset by growth in oncology, cardiology, and diabetes.

Keytruda sales increased 4% (+6% on constant currency) to $7.21 billion, driven by increased global uptake in earlier-stage indications.

Gardasil/Gardasil 9 sales declined 41% to $1.33 billion, primarily due to lower demand in China, partially offset by higher demand in most international regions, particularly in Japan, and higher pricing and demand in the U.S. Excluding China, sales grew 14%, or 16%, excluding the impact of foreign exchange.

Winrevair sales were $280 million. Animal Health sales increased 5% to $1.6 billion, excluding the impact of foreign exchange, sales grew 10%.

Guidance: Merck revises fiscal year 2025 adjusted EPS guidance from $8.88-$9.03 to $8.82-$8.97 compared to the consensus of $8.95.

The company reaffirmed its 2025 sales guidance of $64.10 billion to $65.60 billion versus the consensus of $65 billion.

Merck says the outlook includes the impact of tariffs implemented to date by the U.S. government on imports from other countries, as well as the tariffs imposed by foreign governments on the U.S., the most significant of which relate to China.

Merck estimates that these tariffs will result in incremental costs of approximately $200 million, which will primarily be recorded in the cost of sales and negatively impact the gross margin.

In March, Merck opened a new $1 billion, 225,000-square-foot vaccine manufacturing facility at its site in Durham, North Carolina.

The expansion is a crucial component of the more than $12 billion Merck has invested in the U.S. since 2018. It's focused on expanding domestic manufacturing and research and development capabilities. The company also aims to create new jobs in the U.S. with an additional $ 8 billion in capital investment by 2028.

Price Action: MRK stock is down 0.85% at $78.07 at the last check on Thursday.

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