Why Merck Stock Slipped Today

Key Points

• The pharmaceutical sector company didn't have a memorable second quarter.

• Its performance was mixed, with a narrow miss in sales but a convincing beat in profitability.

• 10 stocks we like better than Merck ›

On Tuesday, Merck (NYSE: MRK) wasn't one of the better-performing pharmaceutical stocks. In contrast to certain peers, the company's share price declined following the release of second-quarter results. Merck lost nearly 2% of its value, posting a steeper decrease than the 0.3% of the bellwether S&P 500 index.

Top- and bottom-line slides

The company released its latest set of figures well before market open, giving investors plenty of time to express their disappointment. For the quarter, total sales were $15.8 billion, representing a year-over-year decline of 2%. This despite the 9% improvement in sales of the company's cancer drug Keytruda, while the take for its animal health portfolio was up a healthy 11%.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Image source: Getty Images.

Net income, on the basis of generally accepted accounting principles (GAAP) and a non-GAAP (adjusted) basis, fell more precipitously. Under the latter standard, it came in at almost $5.4 billion ($2.13 per share), 8% below the year-ago figure.

This meant a mixed quarter for Merck, as the average analyst estimate for revenue was nearly $15.9 billion. Those pundits underestimated adjusted profitability at only $2.03.

It also heralded a change in strategy, with CEO Robert Davis saying that the company is undergoing "a multiyear optimization initiative that will redirect investment and resources from more mature areas of our business to our burgeoning array of new growth drivers, further enable the transformation of our portfolio, and drive our next chapter of productive, innovation-driven growth."

Narrowed guidance

It wasn't only the mixed trailing results that dismayed investors; their negative reaction was also due to Merck narrowing the range of its full-year sales guidance. Total sales for the period are now anticipated to come in at $64.3 billion to $65.3 billion. Previously, it had anticipated potentially higher take ranging from $64.1 billion to $65.6 billion.

As for adjusted profitability, Merck is now modeling $8.87 to $8.97 per share for the year, a change from its preceding guidance of $8.82 to $8.97.

Should you invest $1,000 in Merck right now?

Before you buy stock in Merck, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Merck wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $633,452!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,083,392!*

Now, it’s worth noting Stock Advisor’s total average return is 1,046% — a market-crushing outperformance compared to 183% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 29, 2025

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Merck. The Motley Fool has a disclosure policy.