Can MRK sustain its EPS outperformance beyond 2024?

**Merck's ability to sustain its EPS outperformance beyond 2024 is uncertain and depends on several factors.** Here's an analysis to support this view: 1. **Growth Drivers**: Merck's EPS outperformance in 2024 is largely attributed to the growth of its key drug, Keytruda. The success of Keytruda, which saw a 21% increase in sales, is a significant contributor to Merck's EPS growth. However, the sustainability of this growth beyond 2024 is uncertain, as it depends on ongoing demand and competitive pressures. 2. **Market Conditions**: The pharmaceutical industry is highly competitive, and Merck faces challenges such as rising competitive pressure on its diabetes franchise and challenges for its HPV vaccine in China. These factors could impact Merck's ability to maintain its EPS growth if they worsen or if the company is unable to address them effectively. 3. **Financial Outlook**: Merck has forecasted currency-adjusted operating earnings growth of up to 8% in 2025, driven by demand for semiconductor chemicals and lab equipment in biotech drug production. This suggests a positive outlook for the company's earnings, which could support continued EPS outperformance. However, this forecast is based on current market conditions and Merck's strategic initiatives, which may not remain constant. 4. **Strategic Initiatives**: Merck's focus on research and development, as well as its strategic cost discipline, are positive signs for its long-term growth potential. However, the outcomes of these initiatives in terms of EPS growth are not guaranteed and depend on various factors such as regulatory approvals, market acceptance, and competitive dynamics. 5. **Valuation and Analyst Sentiment**: Merck's stock has been undervalued according to some analyses, which suggests that the company's earnings could be better reflected in the future, potentially leading to higher EPS growth. However, other analyses indicate that the stock's valuation is in line with the pharma sector average, which does not necessarily suggest future outperformance. In conclusion, while Merck's current financial performance and strategic direction suggest a positive outlook for its EPS growth, the sustainability of this outperformance beyond 2024 is uncertain and will depend on a range of factors including market conditions, competitive pressures, and the company's ability to execute its strategic initiatives effectively.