Good Now But Not as Good Later for Merck Earnings

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Even a pharmaceutical giant like Merck  (MRK) - Get Report is not immune to the coronavirus pandemic and its impact on the corporate bottom line - both now and in the future.

Merck on Tuesday posted adjusted earnings that beat analysts’ forecasts as sales of its drugs and vaccines brought in more revenue than expected, though it lowered its full-year 2020 forecast as the ongoing coronavirus pandemic shifts demand for its products.

The company posted adjusted earnings of $3.2 billion, or $1.50 a share, vs. income of $2.9 billion, or $1.22 a share, in the first three months of 2019. Analysts polled by FactSet had been expecting earnings of $1.34 a share. Revenue came in at $12.1 billion, up 11% from last year and also above analysts’ forecasts.

Strong sales of key drugs like its cancer-fighting treatment Keytruda as well as already approved and in use vaccines helped propel first-quarter earnings, the company said. 

Even so, “roughly two-thirds of Merck’s pharmaceutical revenue is comprised of physician-administered products, which, despite strong underlying demand, are being impacted by social distancing measures, fewer well visits and delays in elective surgeries due to Covid-19.”

“These impacts, as well as prioritization of Covid-19 patients at health care providers, are resulting in reduced administration of many of our human health products,” Merck said, adding that it expects “… reduced demand for its physician-administered products while pandemic-related access measures remain in place.”

Merck said it is now sees full-year adjusted per-share earnings of between $5.17 and $5.37 on 2020 revenue of between $46.1 billion and $48.1 billion. Analysts expect revenue of $48.8 billion.

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