Why Merck Stock Is Plummeting Today

Shares of Merck (NYSE: MRK) were trading lower on Tuesday. The company's stock had lost 10.1% as of 2 p.m. ET, but was down as much as 12.5% earlier in the day. The drop comes as the S&P 500 gained 0.5% and the Nasdaq Composite gained 1.1% on the day.

Merck's stock sank after the company reported fourth-quarter and year-end 2024 earnings this morning. Although it narrowly beat Wall Street's revenue targets, weak guidance for 2025 disappointed investors.

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The numbers

For Q4 2024, Merck reported global sales of $15.6 billion, up 7% year over year and narrowly beating expectations. The company delivered a net income of $3.74 billion, which although up from a $1.2 billion loss in Q4 2023, missed Wall Street's expected $3.92 billion. For the full year, Merck reported $64.2 billion in revenue, up 7% from 2023.

The real disappointment came from the company's guidance for 2025. It is forecasting at most $65.6 billion in sales for the coming year, well under the expected $67.1 billion.

Key drug sales face trouble

Merck's biggest moneymakers are its HPV vaccine, Gardasil, and its cancer drug, Keytruda. China is a critical market for Gardasil. Sales there have already been slowing and now new tariffs will further complicate the picture. In the longer term, Merck will have to adapt as its Keytruda patent is set to expire in 2028.

Merck must figure out how to right the ship and turn its Gardasil sales around if it is to succeed. There is hope for the drugmaker, however. Gardasil was recently approved for men and the company expects this to provide a much-needed boost.

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Johnny Rice 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.