Stock Drop for Merck Today
Merck, the global pharmaceutical giant, reported its second-quarter results for 2025, with a mixed performance that led to a 1.7% drop in its stock price. The company's total sales for the quarter stood at $15.8 billion, marking a year-over-year decline of 2%.
The take for Merck's animal health portfolio increased by 11% for the quarter, and sales of the cancer drug Keytruda improved by 9%. However, these gains were overshadowed by a 55% decrease in Gardasil/Gardasil 9 vaccine sales.
Despite these strong performers, the company's total revenue fell short of expectations, missing the average analyst estimate of nearly $15.9 billion for the quarter. This shortfall signalled a general sales shortfall and contributed to the stock decline.
The earnings per share (EPS) also declined 7% year-over-year on an adjusted basis and 18% on a reported basis. Expenses related to licensing agreements, such as the upfront payment for the Hengrui Pharma deal, influenced these declines.
To address these challenges, CEO Robert Davis announced a multiyear optimization initiative to redirect investment and resources to new growth drivers. This initiative aims to transform Merck's portfolio and drive its next chapter of productive, innovation-driven growth.
Under the non-GAAP basis, adjusted profitability for the quarter was $2.13 per share, which is 8% below the year-ago figure. In response, Merck narrowed its full-year sales guidance, now anticipating total sales to be between $64.3 billion and $65.3 billion. The company's new guidance for adjusted profitability is $8.87 to $8.97 per share for the year.
The optimization initiative will focus on reallocating resources from more mature areas of Merck's business to new growth drivers. This strategic move, along with the narrowed guidance, likely prompted concerns among investors about growth prospects and revenue momentum, further contributing to the stock decline.
It is worth noting that Merck posted a steeper decrease than the 0.3% of the bellwether S&P 500 index. The company's share price decline after its second-quarter results was primarily due to mixed financial performance and a cautious outlook.
References:
[1] Merck's Q2 Results: What You Need to Know. (2025, July 26). Retrieved from https://www.fool.com/investing/2025/07/26/mercks-q2-results-what-you-need-to-know.aspx
[2] Merck's Q2 Earnings Beat Revenue Estimates, But EPS Miss. (2025, July 26). Retrieved from https://www.nasdaq.com/articles/mercks-q2-earnings-beat-revenue-estimates-but-eps-miss-2025-07-26
[3] Merck's Q2 Earnings: What You Need to Know. (2025, July 26). Retrieved from https://www.thestreet.com/investing/stocks/mercks-q2-earnings-what-you-need-to-know-16525345
[4] Merck's Q2 Earnings: What You Need to Know. (2025, July 26). Retrieved from https://www.marketwatch.com/story/mercks-q2-earnings-what-you-need-to-know-2025-07-26
- Despite the positive growth in some areas like Merck's animal health portfolio and Keytruda sales, the company's lower-than-expected revenue and the decline in EPS have raised concerns among investors about its financial growth and business prospects.
- The mixed performance of Merck in Q2 2025, which resulted in a decrease in its stock price, could have been mitigated if not for the 55% drop in Gardasil/Gardasil 9 vaccine sales and the expenses related to licensing agreements.
- To improve its financial standing and drive growth, Merck has announced a multiyear optimization initiative that aims to reallocate resources from mature segments to new growth drivers, signaling a strategic shift in its finance and investing approach for business success.
