Merck & Co. Inc. (NYSE:MRK) Q3 2025 Earnings Beat Expectations Despite Stock Decline

Merck & Co. Inc. (NYSE:MRK) reported financial results for the third quarter of 2025 that surpassed analyst expectations on the top and bottom lines, yet the market reaction in pre-market trading was notably negative, with shares declining approximately 3%.

Earnings and Revenue Performance

The pharmaceutical giant posted quarterly sales of $17.28 billion, edging out analyst estimates of $17.13 billion. This represents a 4% increase compared to the $16.66 billion reported in the same quarter last year.

The company's non-GAAP earnings per share (EPS) saw a more substantial beat. Merck reported Q3 2025 non-GAAP EPS of $2.58, comfortably exceeding the consensus estimate of $2.37. This result also marks a significant 64% increase from the $1.57 non-GAAP EPS reported in the third quarter of 2024.

Key financial highlights from the quarter include:

• GAAP EPS: $2.32, up 87% from $1.24 in Q3 2024.
• GAAP Net Income: $5.79 billion, an 83% increase year-over-year.
• Pharmaceutical Sales: $15.61 billion, driven by growth in oncology and cardiovascular products.
• Animal Health Sales: $1.62 billion, a 9% increase.

Product Portfolio and Pipeline Highlights

The quarter's performance was fueled by the company's key growth drivers, while some legacy products faced headwinds.

• KEYTRUDA: The oncology blockbuster continued its strong performance with sales of $8.14 billion, a 10% increase, driven by global demand in various cancer indications.
• WINREVAIR: The cardiovascular drug demonstrated explosive growth, with sales rising 141% to $360 million, reflecting continued market uptake.
• GARDASIL: Sales of the HPV vaccine declined 24% to $1.75 billion, primarily due to lower demand in China.
• CAPVAXIVE: The new pneumococcal vaccine contributed $244 million in its first full year of sales.

Merck also highlighted significant pipeline advancements, including U.S. regulatory approval for a subcutaneous formulation of KEYTRUDA and positive Phase 3 results for its investigational oral PCSK9 inhibitor, enlicitide decanoate.

Updated Financial Outlook and Market Reaction

Despite the earnings beat, the stock traded lower in pre-market activity. This negative sentiment may be attributed to the company's updated full-year 2025 guidance, which, while narrowed and slightly raised, appears to have fallen short of heightened market expectations.

The company now anticipates:

• Full-Year 2025 Sales: $64.5 billion to $65.0 billion (narrowed from a prior range of $64.3 billion to $65.3 billion).
• Full-Year 2025 Non-GAAP EPS: $8.93 to $8.98 (raised from a prior range of $8.87 to $8.97).

While the midpoint of the new EPS guidance represents a slight improvement, the sales forecast midpoint remains largely unchanged. Investors may be focusing on the challenges faced by GARDASIL and weighing them against the robust performance of newer products. The market's reaction suggests that the strong quarterly beat was already priced in, and the future outlook did not provide enough positive surprise to drive the stock higher.

Conclusion

Merck's third-quarter results demonstrate the company's ability to exceed near-term financial targets, powered by its dominant oncology franchise and successful new drug launches. However, the immediate market reaction underscores investor vigilance regarding the company's long-term growth trajectory, particularly as it navigates the upcoming patent expiration for KEYTRUDA and seeks to fully offset the volatility of its vaccine portfolio.

For a detailed breakdown of future earnings estimates and historical performance, review the earnings and estimates data for MRK.

Disclaimer: This article is for informational purposes only and does not constitute investment advice, nor does it recommend buying or selling any securities. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.