--- title: "Dow 30 Earnings: Merck and Co. Fourth Quarter 2018" description: Dow 30, Merck & Co., fourth-quarter earnings of $0.69 a share, versus a loss of $0.39 in the comparable year-ago period. Much of the improvement can be chalked up to the absence of tax reform related charges ($2.6 billion in Q4, 2017) 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 and Co. Fourth Quarter 2018 February 1, 2019 New Jersey-based drugmaker and Dow-30 component **Merck** ([MRK](https://research.valueline.com/research#sym=MRK&list=dow30&sec=company) – [Free Merck and Company Stock Report](https://research.valueline.com/api/report?documentID=2185-VL_20190104_VLIS_MRK_2009_01-1JG6N6JPUNVGS56S1KJ62TECFQ&symbol=MRK)) has reported fourth-quarter earnings of $0.69 a share, versus a loss of $0.39 in the comparable year-ago period. Much of the improvement can be chalked up to the absence of tax reform related charges ($2.6 billion in Q4, 2017), but mid-single-digit growth on the top line and reductions in production (-4%), R&D (-4%), and restructuring costs (-55%) provided further support to comparisons. Meantime, adjusted earnings, which exclude one-time gains, losses, and other nonrecurring items, and are more closely followed by Wall Street, came in at $1.04 a share, versus $0.98 in 2017. The adjusted tally squeaked past consensus expectations of $1.03, thanks in part to continued strong demand in standout immuno-oncology drug *KEYTRUDA*. Shares of MRK were trading a few percentage points higher on the release. In the December period, worldwide revenues advanced 5% year over year, to $11.0 billion, marking the company's fifth-consecutive quarter of top-line growth. Performance continued to be driven primarily by strength in the* KEYTRUDA *franchise, where sales surged 66%, to $2.2 billion. The sharp increase reflected strong momentum in the non-small cell lung cancer segment (NSCLC), and additional launches with new indications globally. Merck also received nice support from lead vaccine asset *GARDASIL* (+32%), which benefited from the ongoing commercial launch in China and improved uptake in domestic and European markets. Growth in animal health was another key catalyst (+6%), helping to offset weakness in the *JANUVIA/JANUMET *diabetes franchise (-4%) and lingering generic pressure on cholesterol-lowering drugs *ZETIA/VYTORIN *(-52%). For full-year 2019, management expects adjusted earnings of $4.57-$4.72 a share on revenues of $43.2 billion-$44.7 billion, implying annual growth of 7% and 4%, respectively, at the midpoints. While the guidance came in at the lower end of analyst expectations, looking for $4.68 a share and $44.5 billion on average, it did not seem to impact investor sentiment. We are currently targeting 2019 adjusted earnings of $4.70 on revenues of $44.5 billion. In our view, little has changed in regard to Merck's long-term growth story. While several core drugs are gaining traction and the animal health business remains a key component (10% of '18 sales), performance going forward remains heavily tied to the continued success and development of *KEYTRUDA*. The drug has emerged as the favorite in the attractive immuno-oncology space, recently surpassing its main rival *OPDIVO* (made by Bristol-Myers Squibb) in terms of total sales, and has established a dominant position in the most lucrative segment of the market, lung cancer. Current projections suggest that annual sales of *KEYTRUDA* could top $12 billion by 2024. All told, we continue to view Merck has a strong option for investors seeking participation in the large pharma space. We like the stock for year-ahead relative price performance and it scores well across all of our proprietary risk metrics. An above-average dividend yield and expectations for continued stock repurchases should enhance shareholder value. **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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