Merck & Co., Inc. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

Merck & Co., Inc. (NYSE:MRK) came out with its quarterly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. It looks like a credible result overall - although revenues of US$17b were in line with what the analysts predicted, Merck surprised by delivering a statutory profit of US$2.32 per share, a notable 13% above expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

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After the latest results, the ten analysts covering Merck are now predicting revenues of US$68.1b in 2026. If met, this would reflect a modest 6.0% improvement in revenue compared to the last 12 months. Per-share earnings are expected to step up 12% to US$8.52. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$68.0b and earnings per share (EPS) of US$8.89 in 2026. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

See our latest analysis for Merck

The consensus price target held steady at US$102, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Merck, with the most bullish analyst valuing it at US$137 and the most bearish at US$82.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Merck's revenue growth is expected to slow, with the forecast 4.8% annualised growth rate until the end of 2026 being well below the historical 8.8% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 8.8% annually. 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. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Merck's revenue is expected to perform worse than the wider industry. The consensus price target held steady at US$102, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Merck going out to 2027, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for Merck that you need to take into consideration.

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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.