--- title: "Dow 30 Earnings: Merck First Quarter Fiscal 2018" description: Dow 30, Merck & Co., first-quarter earnings of $0.27 a share, $1.4 billion charge related to recently formed collaboration with Eisai Co., worldwide revenues advanced 6% year over year to $10.04 billion, adjusted earnings at $1.05 a share beat expectations, strong growth for KEYTRUDA and GARDASIL image: https://investor.valueline.com/hubfs/VL%20Blog%20Images/iStock-506712124.jpg --- [![The Value Line Blog](https://investor.valueline.com/hubfs/VL%20Blog%20Images/vl_blog_header.png)](https://investor.valueline.com/blog) [Stock Highlights](https://investor.valueline.com/blog/topic/stock-highlights) # Dow 30 Earnings: Merck First Quarter Fiscal 2018 May 1, 2018 New Jersey-based drugmaker and Dow-30 component **Merck** ([MRK](https://research.valueline.com/research#sym=MRK&list=dow30&sec=company) – [Free Merck Stock Report](https://research.valueline.com/api/report?documentID=2185-VL_20180406_VLIS_MRK_2009_01-34FTDR9Q7GSTSB20P0RQDVDSCB&symbol=MRK)) reported first-quarter earnings of $0.27 a share, versus $0.56 in the comparable period of 2017. The bottom-line dip can be primarily attributed to a $1.4 billion charge related to a recently formed collaboration with Eisai Co., which more than offset a solid increase in revenues (+6%) and reduced taxes. Meantime, adjusted earnings, which exclude one-time gains, charges, and other nonrecurring items, and are more closely followed by Wall Street, came in at $1.05 a share, versus $0.88 in 2017. The adjusted tally beat consensus expectations of $1.00, thanks in part to stronger demand for its standout immuno-oncology drug*KEYTRUDA*, and management responded by raising its full-year guidance. However, shares of MRK were trading a few points lower on the release. In the March period, worldwide revenues advanced 6% year over year, to $10.04 billion. The gain was highlighted by continued strong momentum in the *KEYTRUDA* franchise (+151%) and double-digit growth in lead vaccine asset *GARDASIL* (+24%). The former benefited from recent launches with new indications globally, while the latter was fueled by solid gains in the Asia Pacific region, primarily due to the commercial entry in China. Merck's blockbuster diabetes drug *JANUVIA/JANUMET *(and now #2 seller behind *KEYTRUDA*) also performed well (+7%), as did several younger assets including* BRIDEON *(+38%) and *SIMPONI *(+26%). Growth in the animal health business (+13%) was another key catalyst, helping to offset continued generic erosion in the *ZETIA/VYTORIN *franchise (-18%). It is worth noting, however, that first-quarter revenue came up just short of Wall Street's $10.1 billion expectation. Following the Q1 release, management upped its 2018 adjusted earnings guidance to $4.16-$4.28 a share (previously $4.08-$4.23) and its total revenue outlook to $41.8 billion-$43.0 billion (previously $41.2 billion-$42.7 billion). While an earnings beat and guidance raise would typically result in a bump in share price, the aforementioned top-line miss may have spooked investors. The company also reported into a markedly down tape. In our view, Merck's long-term growth story remains heavily tied to the continued success of *KEYTRUDA*. While several other development programs have disappointed,* KEYTRUDA *seems like it can do no wrong, emerging as a clear favorite in the high-growth immuno-oncology space. With annual sales projected to exceed $8 billion by 2020, the drug should more than offset mounting generic losses on Zetia/Vytorin and upcoming patent losses. Steady, but less exciting gains in *JANUVIA/JANUMET *and solid momentum in animal health should provide further support. Our current projections call for sales growth of 4% annually over the next 3 to 5 years. All told, we continue to view Merck as a solid core holding for investors seeking participation in the large pharma space. An above-average dividend yield and favorable risk profile should appeal to more conservative, income-oriented accounts. **About The Company: [Merck & Co.](http://www.valueline.com/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=9698)** is an international developer, manufacturer, and distributor of pharmaceuticals. Important product names include *JANUVIA/JANUMET *(type-2 diabetes); *ZETIA/VYTORIN *(hypercholesterolemia); *GARDASIL *(vaccine); *KEYTRUDA* (lung cancer); and *REMICADE* (arthritis). In 2014, the company made three significant acquisitions: Schering-Plough, Idenix Pharmaceuticals, and Cubist Pharmaceuticals. — Michael Ratty *At the time of this article’s writing, the author did not have positions in any of the companies mentioned.* [![Register now for our free One Stock to Buy webinar](https://no-cache.hubspot.com/cta/default/2532383/5a80130b-f0ce-4bd8-acbd-f077f2232ec5.png)](https://cta-redirect.hubspot.com/cta/redirect/2532383/5a80130b-f0ce-4bd8-acbd-f077f2232ec5) ### Popular Posts Search Search Blog ### Topics - [Investing 101 (2)](https://investor.valueline.com/blog/topic/investing-101) - [Market Commentary (37)](https://investor.valueline.com/blog/topic/market-commentary) - [Stock Highlights (390)](https://investor.valueline.com/blog/topic/stock-highlights) - [Stock Market Today (2071)](https://investor.valueline.com/blog/topic/stock-market-today) Copyright 2026 Value Line, Inc. All Rights Reserved. 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