New York, Feb 3, 2026, 12:55 EST — Regular session
- Merck shares climbed roughly 3% following the drugmaker’s strong fourth-quarter results that beat estimates.
- The company projected 2026 sales and profits below Wall Street estimates, citing patent expirations and ongoing pricing pressure.
- Investors are debating if newer launches will be enough to counterbalance the steeper decline in legacy brands.
Merck shares climbed around 3.1% to $116.86 in midday trading Tuesday, despite the drugmaker warning its 2026 outlook would fall short of Wall Street expectations due to patent expirations on older drugs.
Investors are grappling with Merck’s latest guidance as they assess what’s next for the company’s growth trajectory. Keytruda, its flagship cancer immunotherapy, has been a major revenue driver, but looming patent expirations and U.S. drug-pricing regulations are creating new headwinds.
A softer outlook often carries more weight than a solid quarter. It changes the story from “beat-and-raise” to how quickly earnings strength erodes when generics enter the picture.
Merck forecasted 2026 sales between $65.5 billion and $67.0 billion, with non-GAAP earnings per share ranging from $5.00 to $5.15. This guidance factors in a one-time charge related to its Cidara Therapeutics acquisition. The upper end of Merck’s revenue forecast still trails the $67.6 billion consensus, according to LSEG data. BMO Capital Markets’ Evan Seigerman called the quarter a “reasonable foundation” but cautioned that the outlook might temper investor enthusiasm. CEO Robert M. Davis, in an interview, attributed the shortfall versus estimates to challenges with many legacy products. Bernstein analyst Courtney Breen noted the 2026 revenue softness as “a cause for concern.” (Reuters)
The company reported fourth-quarter sales of $16.4 billion with non-GAAP earnings hitting $2.04 per share, slightly beating estimates. It also announced full-year 2025 sales totaled $65.0 billion.
Keytruda raked in $8.37 billion this quarter, marking a 7% rise. Meanwhile, Merck’s HPV vaccine Gardasil dropped 34% to roughly $1.03 billion, hit by sluggish demand in China.
The bigger question is what lies ahead. Merck warned that 2026 will face a $2.5 billion hit, driven by generic competition, Medicare pricing changes, and ongoing declines in sales of its COVID antiviral pill Lagevrio.
Merck pointed to rising sales from newer drugs as part of its growth strategy. The company also announced that the U.S. Food and Drug Administration has accepted a supplemental application for its pulmonary arterial hypertension treatment, Winrevair. The FDA’s decision deadline is set for Sept. 21, 2026, under the Prescription Drug User Fee Act. (Merck)
Deal-making is still on the agenda. Merck has closed two deals, each around $10 billion, to bolster its pipeline, and executives hinted they’re still hunting for opportunities. They favor mid-sized acquisitions but are open to larger targets as well.
The setup isn’t without risk. Should generic competition accelerate beyond forecasts, or if growth in Keytruda slows, Merck might find it tougher to offset declines in diabetes and other older products. Demand for Gardasil in China also remains a wild card investors haven’t fully accounted for.
Traders will be watching closely to see if fresh launches and late-stage data can close the gap between company guidance and Street expectations, or if pricing moves in the U.S. end up pushing that gap wider.
Merck will report first-quarter 2026 earnings on April 30, marking the next key date on the calendar. (Merck)
