Merck's Q1 Earnings Exceed Estimates, But Tariffs Hit Profit Outlook

Merck lowered its full-year EPS forecast to $8.82-$8.97, down from $8.88-$9.03, due to a $200m tariff hit. The company expects full-year revenue of $64.1-$65.6bn. Q1 earnings beat estimates, driven by oncology portfolio and animal health products, but Keytruda sales fell short. Gardasil sales declined 41% YoY due to weak demand in China and shipment halts. Shares traded down 1.1% at around $78.

Merck & Co. Inc. (MRK) reported its first-quarter 2025 earnings on Thursday, with adjusted earnings per share (EPS) of $2.22, exceeding the consensus estimate of $2.14. The company's quarterly revenue of $15.53 billion also surpassed expectations by $15.31 billion. Despite these strong results, Merck has adjusted its full-year EPS forecast to $8.82-$8.97, down from $8.88-$9.03, citing a $200 million tariff hit [1].

The company attributed the tariff costs to levies between the U.S. and China, as well as to a recent licensing agreement with Hengrui Pharma. These tariffs are expected to result in incremental costs of approximately $200 million, primarily impacting the cost of sales and gross margin. Merck has also lowered its full-year sales forecast to between $64.1 billion and $65.6 billion, unchanged from the previous outlook [2].

Keytruda, Merck's best-selling monoclonal antibody, saw a 4% increase in sales to $7.2 billion, but this growth was not enough to offset the 41% decline in Gardasil sales due to weak demand in China and shipment halts. The company's animal health products and oncology portfolio, however, contributed to the quarter's strong performance [3].

Merck's stock traded down 1.1% at around $78.07 following the announcement. The company has invested heavily in the U.S., with a focus on expanding domestic manufacturing and research and development capabilities. It has committed to investing an additional $8 billion in capital investment by 2028 [2].

References:
[1] https://www.marketscreener.com/quote/stock/MERCK-CO-INC-13611/news/Merck-Q1-EPS-exceeds-expectations-49705654/
[2] https://www.cnbc.com/2025/04/24/merck-mrk-earnings-report-q1-2025.html
[3] https://www.benzinga.com/general/biotech/25/04/44983460/mercks-q1-earnings-beat-wall-street-adjusts-2025-profit-outlook-as-tariffs-may-result-in-incremental-cost-of-200-million