What Analysts Recommend for Merck ahead of 3Q17 Earnings

Mike Benson - Author

Oct. 24 2017, Updated 4:21 p.m. ET

A look at Merck’s 3Q17 estimates

Merck (MRK) is set to release its 3Q17 earnings on October 25, 2017. Analysts expect earnings per share (or EPS) of $1.03 on revenues of $10.6 billion for 3Q17.

The above chart compares analysts’ estimates and actual EPS over the last few quarters and estimates for EPS for 3Q17.

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3Q17 revenues

Merck’s revenues could rise marginally by 0.1% to $10.55 billion for 3Q17 as compared to the revenues of $10.54 billion for 3Q16. Analysts expect the operational increase in revenues will be substantially offset by the negative impact of foreign exchange. The major growth contributors during 3Q17 are expected to include key drugs like Gardasil, Keytruda, Proquad/Varivax, and animal health products.

Profitability estimates

Analysts estimate Merck’s gross profit margin to come in at 75.8% for 3Q17, a 0.5% increase as compared to the gross profit margin of 3Q16. Also, due to the increase in R&D expenses, and higher selling, general, and administrative expenses as a percentage of total revenues, the EBITDA margin is expected to fall to 37.3% in 3Q17 as compared to 48.6% in 3Q16. The net adjusted income is expected to fall to ~$2.85 billion in 3Q17.

The Fidelity MSCI Health Care ETF (FHLC) holds 4.8% of its total assets in Merck (MRK). FHLC also has 5.6% of its total assets in Pfizer (PFE), 3.0% in Gilead Sciences (GILD), and 2.5% in Abbott Laboratories (ABT).


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