The Merck & Co., Inc. (NYSE:MRK) Annual Results Are Out And Analysts Have Published New Forecasts

Shareholders might have noticed that Merck & Co., Inc. (NYSE:MRK) filed its full-year result this time last week. The early response was not positive, with shares down 8.8% to US$89.67 in the past week. It looks like the results were a bit of a negative overall. While revenues of US$64b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 3.8% to hit US$6.74 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Merck after the latest results.

See our latest analysis for Merck

Taking into account the latest results, the current consensus from Merck's 22 analysts is for revenues of US$66.0b in 2025. This would reflect a modest 2.9% increase on its revenue over the past 12 months. Per-share earnings are expected to shoot up 23% to US$8.34. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$67.5b and earnings per share (EPS) of US$8.79 in 2025. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.

Despite the cuts to forecast earnings, there was no real change to the US$119 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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. The most optimistic Merck analyst has a price target of US$148 per share, while the most pessimistic values it at US$95.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Merck shareholders.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Merck's revenue growth is expected to slow, with the forecast 2.9% annualised growth rate until the end of 2025 being well below the historical 9.8% 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 9.2% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Merck.

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. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$119, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates 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.