The backtest results show that MRK has a low short-term win rate of 27.27% over 3 days and 36.36% over 10 days following earnings beats, with slight negative returns in these periods. However, the 30-day win rate improves to 54.55%, yielding a modest positive return of 1.22%. This indicates a delayed but mild positive price reaction to earnings beats. Investors might consider a longer holding period post-earnings beat for MRK to capture potential gains, as immediate returns tend to be weak or negative.

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The backtest results show that MRK experienced negative returns following earnings misses, with a 33.33% win rate over 3, 10, and 30 days and a 30-day average return of -3.34%. This indicates a consistent downward price pressure after earnings disappointments. The maximum return of 2.23% occurred on day 8, but overall performance was weak. Investors should be cautious with MRK after earnings misses, as the stock tends to underperform in the short to medium term, suggesting a defensive stance or avoidance during such events.

The backtest results show that the Pharmaceuticals Industry experienced a slight negative impact with a maximum return of -0.36% on the event day following earnings beats. This indicates that despite positive earnings surprises, the industry did not gain immediate positive momentum. The analysis suggests that earnings beats in this sector may not translate into short-term stock price gains, possibly due to other overriding market factors or investor expectations.

Investors should be cautious about expecting immediate positive returns from earnings beats in the Pharmaceuticals Industry and consider longer-term or alternative indicators for investment decisions.

The backtest results show that the Pharmaceuticals Industry experiences a negative impact following earnings misses, with a maximum return decline of 0.49% on the event day. This indicates a consistent adverse market reaction to earnings underperformance within this sector. The analysis suggests that earnings misses are a reliable signal of short-term downside risk for pharmaceutical stocks. Investors should consider this pattern when evaluating risk exposure in the Pharmaceuticals Industry, potentially adopting more cautious or defensive strategies around earnings announcements that may miss expectations.

The backtest reveals that Merck's earnings beat positively impacted the Capital Markets industry, showing sustained gains over 34 days. Conversely, the Healthcare Equipment and Supplies sector experienced a bearish trend for 41 days following the event. This divergence suggests a sector rotation favoring pharmaceuticals over medical devices after Merck's strong performance. Investors can interpret this as a signal to overweight Capital Markets-related assets while reducing exposure to Healthcare Equipment and Supplies in the short to medium term after similar earnings surprises.

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The backtest reveals that Merck's earnings miss led to a significant negative impact on the Healthcare Technology industry, with sustained declines over 27 days. In contrast, the Electric Utilities sector experienced a positive reaction lasting 53 days, likely due to its defensive nature amid market uncertainty. This divergence highlights sector-specific responses to pharmaceutical earnings disappointments.

The results suggest that investors tend to reduce exposure to innovation-driven healthcare tech while reallocating to stable, defensive utilities during such events.

For investment strategy, this indicates a potential benefit in shifting toward Electric Utilities and away from Healthcare Technology following Merck's earnings misses.

Backtest MRK Earnings Beat and Miss Expectations

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