Merck & Co. shares declined 3.9% to $117.16 during Monday's trading session, significantly lagging the S&P 500 and Nasdaq, which posted modest gains. The drop placed pressure on the Dow Jones Industrial Average, with fellow healthcare constituent Amgen also falling over 2%.
Earnings Guidance Weighs on Sentiment
The selloff follows the company's recent disclosure of its 2026 financial targets, which include sales projections between $65.5 billion and $67.0 billion. Non-GAAP earnings per share are expected to land in the $5.00 to $5.15 range. Management warned that generic competition, Medicare drug price negotiations, and declining revenue from its COVID-19 antiviral Lagevrio could create a $2.5 billion headwind that year.
Fourth-quarter 2025 results showed a 5% year-over-year sales increase to $16.4 billion. While oncology blockbuster Keytruda saw revenue rise 7% to $8.37 billion, sales of the Gardasil vaccine franchise dropped 34% to $1.03 billion, attributed partly to weaker demand in China.
Pipeline Developments and Market Focus
Merck continues to advance its pipeline, noting a U.S. FDA target action date of September 21, 2026, for a label update on WINREVAIR. Separately, its Canadian division received Health Canada approval for ENFLONSIA (clesrovimab) to prevent RSV in infants.
Despite these developments, investor attention remains fixed on the long-term transition away from mature products. CEO Rob Davis recently highlighted a "disconnect" with analyst models, pointing to patent expirations as a key factor. Analysts have noted the 2026 outlook may temper near-term revenue expectations.
Market participants are now looking ahead to key U.S. economic data, including jobs and inflation reports, which could influence interest rate expectations and trading in defensive sectors like healthcare. Merck is scheduled to report its next quarterly results on April 30.
