Earnings Update: Merck & Co., Inc. (NYSE:MRK) Just Reported Its First-Quarter Results And Analysts Are Updating Their Forecasts

It's been a good week for Merck & Co., Inc. (NYSE:MRK) shareholders, because the company has just released its latest quarterly results, and the shares gained 6.3% to US$82.74. Merck reported US$16b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$2.01 beat expectations, being 4.0% higher than what the analysts expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Our free stock report includes 1 warning sign investors should be aware of before investing in Merck. Read for free now.

Taking into account the latest results, Merck's 24 analysts currently expect revenues in 2025 to be US$65.1b, approximately in line with the last 12 months. Statutory earnings per share are predicted to step up 14% to US$7.90. Before this earnings report, the analysts had been forecasting revenues of US$65.0b and earnings per share (EPS) of US$8.09 in 2025. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

View our latest analysis for Merck

The consensus price target held steady at US$108, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Merck, with the most bullish analyst valuing it at US$146 and the most bearish at US$82.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Merck's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 2.4% growth on an annualised basis. This is compared to a historical growth rate of 9.2% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 8.9% per year. Factoring in the forecast slowdown in growth, it seems obvious that Merck is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$108, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Merck analysts - going out to 2027, and you can see them free on our platform here.

You still need to take note of risks, for example - Merck has 1 warning sign we think you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.