Merck & Co., Inc. Earnings: Is Growth Around the Corner?

The drugmaker has seen patent-cliff woes, but could earnings start climbing again?

Apr 28, 2014 at 6:30PM

On Tuesday, Merck (NYSE:MRK) will release its quarterly report, and investors have sent the stock soaring to multiyear highs recently. Even though Merck's revenue and earnings aren't likely to grow from year-ago levels, Merck is showing promise in its ability to stand up to Pfizer (NYSE:PFE), Johnson & Johnson (NYSE:JNJ), and other pharma rivals in its development pipeline. Even though impressive clinical trial results won't produce an immediate impact to Merck's financial statements, Merck's efforts in research and development will be what creates tomorrow's blockbuster drug candidates.

Merck has a history as a stalwart of the pharma space, and that has made some growth-oriented investors focused more on up-and-coming biotechs as having more upside potential. Yet in promising areas like hepatitis C and cancer, Merck has made progress in establishing itself as a force to be reckoned with among its competitors. Let's take an early look at what's been happening with Merck over the past quarter and what we're likely to see in its report.

Source: Steven Depolo, Flickr.

Stats on Merck

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$10.44 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Which way will Merck earnings move this quarter?
In recent months, analysts have trimmed their views on Merck earnings, cutting first-quarter estimates by $0.04 per share and reducing their longer-term 2014 and 2015 projections by the same amount. The stock, though, has soared higher, rising 12% since late January.

Merck's fourth-quarter earnings report showed the challenges that the pharma giant has faced in recent years. Revenue fell 3.4%, sending net income dropping 14%. The patent expiration of asthma drug Singulair has had the biggest impact on Merck's financials recently, and so far, Merck hasn't been able to replace Singulair's success with new drug candidates. That's a similar story to what Pfizer has seen lately, although Johnson & Johnson has thus far done a better job of avoiding patent cliff-related revenue declines and has seen its sales continue to rise.

Mrk Vaccine

Source: Merck.

Still, Merck is looking increasingly impressive in several key areas of its pipeline. In hepatitis C, Merck's combination MK-5172 and MK-8742 therapy for genotype 1 has recently exploded on the scene, and although it's only in phase 2 trials, many analysts believe that the combination could eventually pose a threat to better-established rivals in the hep C area. Moreover, its cancer-fighting MK-3475 therapy has gotten a lot of attention from the pharma industry, with Pfizer and other peers partnering with Merck to run clinical trials combining MK-3475 with other drugs. As Merck ramps up its pipeline activity, it's clear the company wants new blockbusters to boost overall sales.

At the same time, though, Merck has to defend its turf on some of its more successful remaining drugs. In the diabetes realm, Januvia and Janumet have seen substantial growth and continue to bring billions of dollars in annual revenue into Merck's coffers. Yet competitors are seeking to come up with diabetes drugs of their own, forcing Merck to conduct its own research into new potential diabetes drugs like ertugliflozin and omarigliptin in order to protect its position in the space. Similarly, in cholesterol treatments, Merck's Zetia could be under threat from biotech competition, as late-stage clinical studies have shown competing drugs with superior results in reducing cholesterol.

In the Merck earnings report, watch to see whether the company elaborates on the impact of the Affordable Care Act on its business. Already, Merck has stopped a popular program that helped reimburse patients for insurance copayments, citing the possibility that such measures violate terms of Obamacare. With many investors worried about the changing state of health care in America, Merck needs to make sure it's ahead of the curve in addressing those changes if it wants to start growing again.

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That’s beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor’s portfolio. To see our free report on these stocks, just click here now.


Click here to add Merck to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers