Merck’s performance in 1Q18
In 1Q18, Merck (MRK) reported revenues close to $10.0 billion, which is a year-over-year (or YoY) rise of around 6% on a reported basis and 3% on a constant exchange rate (or CER) basis. The company earned $4.1 billion in revenues from the US market, which was a YoY decline of 1%. However, the company earned $5.9 billion in revenues from international markets, which is a YoY rise of 13%.
Merck’s pharmaceutical business reported revenues close to $8.9 billion in 1Q18, which is YoY growth of 9% on a reported basis and 4% on a CER basis. The rapid adoption of Keytruda, which has emerged as a foundational therapy across multiple tumor types, has played a pivotal role in driving the company’s global human health business performance despite competitive pressures as well as the impact of the loss of patent exclusivity of certain products. Merck’s animal health business reported revenues close to $1.1 billion in 1Q18, which is a YoY rise of 13% on a reported basis and 7% on a CER basis. The animal health business became a separate reportable segment in 1Q18.
Merck reported a non-GAAP gross margin close to 75.7% in 1Q18, which is a YoY rise of 1.7 percentage points, which was mainly attributable to unfavorable foreign currency fluctuations coupled with higher amortization expenses associated with manufacturing variances, a consequence of the cyber event Merck witnessed in 2017.
Analysts’ recommendations for Merck
Of the 21 analysts covering Merck in May, six have recommended the company as a “strong buy,” ten have recommended it as a “buy,” and five have recommended the company as a “hold.”
Analysts’ recommendations for peers
Of the 20 analysts covering Pfizer (PFE) in May 2018, 55.0% recommend a “buy.” About 59.1% of the 22 analysts covering Eli Lilly (LLY) stock recommend a “buy,” and 74.2% of the 31 analysts tracking AstraZeneca (AZN) recommend a “buy.”
In the next article, we’ll discuss revenue growth prospects for Merck in fiscal 2018.