On Tuesday, Merck & Co Inc MRK reported fourth-quarter sales of $15.62 billion, up 7% year over year and slightly beating the consensus estimate of $15.49 billion. Excluding the impact of foreign exchange, sales increased 9%.

Merck reported adjusted EPS of $1.72, up from $0.03 a year ago and beating the consensus of $1.62. Lower charges for business development transactions and operational strength primarily drove the increase.

Merck expects fiscal year 2025 sales of $64.1 billion-$65.6 billion versus a consensus of $67.31 billion.

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The sales range reflects a decision to temporarily pause Gardasil/Gardasil 9 shipments into China beginning February 2025 through at least mid-year.

Goldman Sachs analyst writes that Merck delivered strong operational performance across the majority of the company's market-leading (Oncology), attractively emerging (PAH), and re-emerging competitive (Infectious disease) portfolios; however, weaker guidance was a source of disappointment.

Analyst Chris Shibutani writes that the magnitude of the downside move was overdone and maintains the Buy rating with a price forecast of $135, up from a prior $129.

Across the commercial portfolio, the analyst remains bullish on Winrevair's potential.

Analyst Shibutani writes that the company is well-equipped to invest in business growth and prioritize capital allocation effectively. Their track record shows that they can successfully make strategic moves—both aggressive, like acquiring Acceleron and Prometheus, and cautious, like passing on Seagen due to valuation concerns.

BofA Securities writes Merck stock's valuation was too low for an above-average growth profile.

A BofA analyst notes that Merck has one of the strongest late-stage drug pipelines among its peers and remains a top-tier R&D company. They still see more potential gains than risks at current levels and maintain a Buy rating. However, BofA writes the stock may take some time to stabilize in the short term.

The analyst lowered the price target from $118 to $112.

Price Action: MRK stock is down 0.79% at $90.02 at the last check on Wednesday.

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Image via Merck