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Analysts’ Future Estimates for Merck & Co.

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Analyst estimates

Merck & Co. (MRK) surpassed Wall Street analysts’ estimates for EPS (earnings per share) but missed analysts’ estimate for revenues in 3Q17. It reported EPS of $1.11 against the estimate of $1.03 and reported revenues of $10.3 billion compared to the estimate of $10.6 billion.

The above chart compares the actual EPS and analysts’ estimates for EPS over the last eight quarters. For 4Q17, analysts estimate Merck’s EPS at $0.93 on revenues of $10.5 billion. The gross margin is expected to be 75.6% compared to 74.9% in 4Q16. Its EBITDA (earnings before interest, tax, depreciation, and amortization) margin is expected to be 34.1% in 4Q17 compared to 43.6% in 4Q16. Its net profit margin is expected to be flat at 24.4% in 4Q17 compared to 4Q16.

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Annual estimates

For 2017, analysts estimate that Merck will report 1.1% growth in revenues to $40.2 billion compared to $39.8 billion for 2016. Analysts also estimate EPS of $3.94 for 2017 compared to $3.78 for 2016.

Merck’s revenues are expected to increase in 2017 due to the inclusion of new products following the acquisition of Vallee, an increase in sales of companion animal products, strong sales of Keytruda and Zepatier, and an increase in sales of human vaccines. However, growth will be substantially offset by lower sales of Janumet, Vytorin, Januvia, Gardasil, and Zetia.

Merck’s gross margin is expected to increase 76.6% in 2017 compared to 75.7% in 2016. Its EBITDA margin is expected to fall to 39.8% in 2017 compared to 48.1% in 2016. Its net profit margin is expected to rise to 26.9% in 2017 compared to 26.5% in 2016.

The iShares Morningstar Large Cap Value (JKF) holds 8.1% of its total investments in healthcare companies. It holds 2.4% in Merck (MRK), 3.3% in Pfizer (PFE), 2% in Amgen (AMGN), and 1.6% in Gilead Sciences (GILD).

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