Updated Aug 12 at 10:50am ET.
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A new executive order calls for splitting the combined MMR vaccine into three separate shots. Merck is the primary maker of this vaccine, which has been the standard of care for decades because it protects against three diseases with a single visit. Experts suggest the change is unlikely to happen soon because it lacks a scientific basis and would require a complete overhaul of how these medicines are made and tested.
For Merck, this is a development to watch rather than an immediate threat. The company's vaccine business is a steady source of income, and any forced change to how it packages these products could add significant manufacturing costs and complexity. However, because the regulatory process for vaccines is rigorous and slow, any actual shift in how these shots are delivered would likely take years to play out.
Source: CNBC
Morgan Stanley raised its price target for Merck to $116 from $113. This is a small adjustment that still suggests the firm thinks the stock is worth less than its current price of about $128. While the firm is being cautious, other analysts are more optimistic, with an average target across the market of $141. This gap usually shows a disagreement over how well Merck can replace the earnings from its top cancer drug before its legal protections end in 2028.
Source: Morgan Stanley
Merck reported second-quarter sales of $16.6 billion, slightly ahead of what analysts expected. The results were led by its top cancer drug, Keytruda, and a strong start for Winrevair, a new treatment for a type of high blood pressure in the lungs. Winrevair sales reached $588 million, showing it is quickly becoming a major new source of income.
The company reported a loss of $0.13 per share, but this was better than the $0.27 loss analysts feared. The loss was caused by a one-time $2.31 per share charge to buy Terns Pharmaceuticals, a biotech firm. Because this was a planned cost to buy new technology rather than a problem with the business, Merck raised its sales outlook for the full year. This suggests the core business is healthy even as the company spends heavily to find its next generation of medicines.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Hilleman Laboratories, a joint venture between Merck and the charity Wellcome, is preparing to manufacture a vaccine for the Bundibugyo strain of Ebola. This strain is currently causing an outbreak in the Democratic Republic of Congo. While this is an important public health effort, it is unlikely to have a major impact on Merck's profits. These types of partnerships are common for large drugmakers and help maintain their manufacturing capabilities and global reputation.
Source: Reuters
Merck has signed agreements with seven generic drugmakers to produce lower-cost versions of its experimental once-monthly HIV pill. These deals cover 129 low- and middle-income countries where the need for affordable treatment is highest. This move helps ensure global access to new medicines if they are approved. For investors, this is a routine part of how big pharma companies manage their social responsibilities and does not change the profit outlook in major markets like the U.S. or Europe.
Source: Reuters
Analysts have recently issued a flurry of price target increases for the stock. Most analysts, 25 out of 37, rate it a buy, and the average target of $141 suggests a 7% gain from today's price.
Management has a habit of setting a bar they can clear, beating expectations in seven of the last eight quarters even while spending heavily on acquisitions.
| Expectation | |
|---|---|
| EPS | $2.27 |
| Revenue | $17.31B |
