Merck boosts 2026 profit target after Keytruda sales surge

Merck raised its adjusted profit forecast for 2026 on Thursday, citing stronger than expected sales of its cancer drug Keytruda. The company now projects adjusted earnings of $2.77 to $2.82 per share for the year. This marks an increase from its previous range of $2.66 to $2.76. The new guidance accounts for a one-time charge of $400 million, or 12 cents per share, related to a licensing deal with the Chinese drugmaker SciBrunch. Merck also narrowed the low end of its revenue outlook to a range of $66.8 billion to $67.3 billion, up from an earlier estimate of $66.3 billion to $67.3 billion.

For the third quarter, the company reported adjusted earnings of $2.49 per share. This figure significantly exceeded the $2.08 per share expected by analysts surveyed by LSEG. Total revenue reached $18.09 billion, a 5% increase from the same period last year and ahead of the $17.31 billion forecast. Net income fell to $5.07 billion, or $2.04 per share, down from $5.79 billion, or $2.32 per share, in the prior year.

Keytruda generated $8.60 billion in sales during the quarter, topping the $7.73 billion estimated by StreetAccount. A major driver was Keytruda Qlex, an under-the-skin injection launched in 2025. Qlex contributed $830 million to the total, well above the $649 million analysts had projected. This result positions Qlex to soon qualify as a blockbuster product, a term defined as a product with more than $1 billion in sales.

The shift to Qlex is central to Merck's strategy to protect its franchise as Keytruda faces generic competition after key patents expire in 2028. The company aims to move patients from the original intravenous version to the injection, which is considered more convenient. This transition would help Merck defend its market share and sustain blockbuster sales levels after the original version loses exclusivity. The company has also pursued a series of deals to offset the coming generic pressure.

Other newer products also outperformed expectations. Winrevair, a treatment for a rare and deadly lung condition, generated $694 million in sales, a 93% increase from a year earlier. This beat the $645 million analysts anticipated. The Gardasil vaccine, which protects against cancers caused by HPV, drew about $2 billion in sales on higher demand in the United States. Analysts had expected $1.76 billion. This rebound follows a difficult previous year marked by elevated inventory and weak demand in China.

Merck's animal health business posted $1.68 billion in sales for the quarter, coming in slightly below analyst estimates.