Categories Analysis, Health Care

Is Merck & Co. (MRK) a good investment after Q1 earnings?

The management is bullish on the progress in development programs across the oncology portfolio

Merck & Co., Inc. (NYSE: MRK) is recovering from the virus-induced slowdown supported by stable demand across its product line globally, a trend the pharmaceutical company expects to continue in the near future.

Though the company’s performance was initially hit by the COVID-related disruption, more recently the stock stayed surprisingly resilient to the market headwinds and mostly stayed above its long-term average. It had a positive start to the year and maintained the momentum so far. Experts believe there is more room for growth and that MRK is poised to reach the $100-mark in the next twelve months.

Investing in Merck

The company’s fundamentals are quite strong and it has a promising pipeline, led by flagship cancer drug Keytruda. It is one of the best-selling medicines globally, with sales volumes growing consistently, and is being investigated for additional indications. Merck’s animal health division is also growing steadily. Its coronavirus therapy — developed jointly with Ridgeback Biotherapeutics — has shown positive results in advanced-stage clinical trials.

Read management/analysts’ comments on Merck’s Q1 2022 earnings

Currently, business development is the main priority for Merck’s executives. Recently, the company acquired Acceleron Pharma Inc. (NASDAQ: XLRN) in a move aimed at expanding its cardiovascular portfolio and pipeline further.

Merck Q1 2022 earnings infographic

From Merck’s Q1 2022 earnings conference call:

“We’ve taken important steps to provide increased transparency into the opportunities we see in our portfolio and our business, including through two recent investor events. Earlier this month, we provided a detailed description of our growing cardiovascular portfolio and pipeline. At Merck, we’re focusing our efforts where the needs are greatest and where we have the best opportunity to positively impact patients’ lives, including in heart failure, pulmonary arterial hypertension, thrombosis, and atherosclerosis.”

Q1 Performance

In the first quarter of 2022, worldwide sales from continuing operations jumped 50% annually to $15.9 billion and surpassed consensus estimates. Sales of leading products increased in double digits, aided by the market reopening and improvement in the COVID-19 situation. Earnings, excluding special items, surged 84% to $2.14 per share and topped expectations.

Anticipating the strong momentum to continue during the remainder of the year, Merck’s management raised full-year earnings and revenue guidance. It is particularly bullish on the progress in development programs across the oncology portfolio which has witnessed multiple approvals, both at home and overseas. It is estimated that Merck is on track to receive at least eight cardiovascular approvals by 2030.

Stock Watch: Should you invest in Eli Lilly (LLY) after Q1 earnings?

Merck’s stock has gained about 14% this year and often outperformed the market. It traded slightly lower early Wednesday after closing the previous session higher.

Looking for more insights on the earnings results? Click here to access the full transcripts of the latest earnings conference calls!

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