Merck Cuts Earnings Forecast Due to EyeBio Acquisition

Merck & Co reduced its full-year earnings prediction after incurring charges from its EyeBio acquisition. Despite this, Merck's sales forecast increased slightly, and it experienced strong growth in its cancer drug Keytruda. Merck's shares dropped 2% in premarket trading, though the stock is up 17% for the year.

Merck & Co on Tuesday revised its full-year earnings forecast downwards, primarily due to significant charges from acquiring eye-focused drug developer EyeBio. The company now expects 2024 earnings to be between $7.94 and $8.04 per share, decreased from its previous estimate of $8.53 to $8.65 per share, following a $1.3 billion acquisition-related charge.

The announcement led to nearly a 2% decline in Merck's shares during premarket trading, although the stock has gained more than 17% this year. Contrarily, Merck increased its full-year sales projections, aligning with other big pharmaceutical firms like Roche, Johnson & Johnson, and Bristol Myers Squibb that also raised their forecasts earlier this month.

New Jersey-based Merck experienced robust growth in its blockbuster cancer drug Keytruda, the world's top-selling prescription medicine. The company reported a profit of $5.5 billion, or $2.14 per share, in the second quarter, a stark contrast to a $6 billion loss, or $2.35 per share, during the same period last year, which was affected by a substantial acquisition-related expense.

Excluding one-time items, Merck's earnings were $2.28 per share, surpassing the analyst average expectation of $2.15 per share, as per LSEG data. Quarterly sales reached $16.1 billion, a 7% increase from the previous year and above analysts' forecast of $15.8 billion.

Keytruda has consistently been Merck's top revenue contributor, with annual sales projected to exceed $30 billion before its patent expires at the decade's end. Keytruda's sales in the quarter were $7.3 billion, marking a 16% year-over-year rise and beating analysts' estimates of $7.1 billion.

Merck adjusted its full-year sales expectations to $63.4 to $64.4 billion, slightly higher than its prior prediction of $63.1 to $64.3 billion.

(With inputs from agencies.)