Merck Reverses Higher As Keytruda, Gardasil Outplay Covid Decline; Bristol Shares Dip

Merck stock swings to a gain while Bristol Myers falls, after both companies release their earnings reports for the first quarter of 2023.

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Jun 8, 2023 • 3 min read

Merck (MRK), a pharmaceutical giant, topped Wall Street’s first-quarter predictions on Thursday. Bristol Myers Squibb delivered a mixed result. Merck's stock soared while BMY's stock plummeted.

Keytruda, a cancer treatment, and Opdivo, a drug that treats cancer, helped Merck and Bristol grow. Keytruda's sales surged 20% to $5.8 billion while Opdivo's sales increased 15% to $2.2 Billion. Both drugs exceeded analyst expectations.

Gardasil was also a major contributor to Merck's success, with sales of $1.97 billion, up 35%. Bristol Myers' top-selling drug was Eliquis a blood thinner which generated $3.42 Billion. Eliquis sales grew 7%.

Both companies had to deal with steep declines. Merck's Covid tablet Lagevrio, and Bristol's cancer drug Revlimid both experienced double-digit sales declines. Lagevrio has been struggling since January, when Covid cases reported by the Centers for Disease Control and Prevention reached a peak. Since then they have trended downwards. Revlimid faces new generic competition.

Merck's stock ended today's trading session with a 1.5% gain at 115.16. BMY finished a little lower at 67.61.

Merck's adjusted profits fell 35%, to $1.40 a share. Sales dropped 9%, to $14.49 Billion. Earnings fell by 30% excluding the effect of exchange rates while sales dropped 5%.

FactSet reports that Merck analysts had expected a much more dramatic decline in adjusted earnings to $1.32 per share and $13.79billion in sales. Sales grew by 15%, even after excluding the effects of Covid pill Lagevrio, exchange rates and Covid pill Lagevrio.

The sales of Lagevrio plummeted by 88%, to $392 millions. In a client note, Lee Brown, Global Sector Lead for Health Care at Third Bridge, said that this "painfully" (underscores the transition to a new post-pandemic world.

Merck isn’t the only one feeling the decline of Covid. GSK (GSK), and Roche (RHHBY), both reported first-quarter declines in their Covid products, after the number of Covid cases in the U.S. fell early in the quarter.

Sales of Merck's diabetes medication Januvia also fell 29%, to $880 millions. Sales were below expectations of $923 million. Merck said it faces competition abroad, especially in Europe, in the diabetes market. The U.S. market also saw a decline in revenue due to lower prices and demand.

Merck has raised its sales forecast for the coming year. It now expects between $57,7 billion and $58.9billion in revenue. This is in line with Merck's stock analysts who had predicted $58.33billion. The company has also increased its profit forecast to $6.88-$7 a share. Merck's midpoint forecast was higher than the $6.91 expected by analysts.

MarketSmith.com reports that Merck recently broke through a consolidation, with a buying point of 115.59.

Bristol Myers struggles to reverse sales declines in its generics, Revlimid, and Abraxane (a cancer drug), Brown stated separately.

He said that "Bristol’s overall performance across their portfolio felt rather lackluster despite the management's description as a strong showing. Many product lines fell below expectations, with notable exceptions of Eliquis, and Opdivo where results were basically in line."

Bristol's total sales fell 3%, to $11.34 Billion. FactSet reported that BMY analysts had expected slightly higher sales of $11.5 billion. Earnings adjusted up 5%, to $2.05 per shares. This exceeded expectations of $1.97.

Revlimid's sales fell 37%, to $1.75 Billion. Abraxane revenues rose 12%, to $239 Million.

Bristol Myers has maintained its sales guidance for the coming year. The company expects a 2% increase in sales. The company expects to earn between $7.95 and $8.25 per share. Analysts at BMY expect $46.86 Billion in sales (up 1.5%), and $8.05 per share in adjusted earnings.

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