Bernstein: Merck’s third-quarter revenue beats expectations: Early purchases contribute $550 million, Qlex sales accelerate

How much of the third-quarter beat came from early purchases?

Merck’s revenue in the third quarter of 2026 was 18.09 billion dollars, approximately 5% above the market consensus of 17.23 billion dollars; non-GAAP earnings per share were 2.49 dollars, above market expectations of approximately 2.12 dollars.
Bernstein said approximately 550 million dollars of the revenue beat was related to the timing of purchases of Keytruda, Winrevair and Gardasil and is expected to reverse from the fourth quarter of 2026 through the first quarter of 2027. Excluding this effect, the revenue beat falls to approximately 2%.
The firm expects investors to welcome the results but stressed that one-time factors and benefits from tax rates and exchange rates affected their interpretation.

Third-quarter sales of Qlex, the subcutaneous version of Keytruda, were 830 million dollars, up 79% from 463 million dollars in the second quarter. Combined sales of intravenous Keytruda and Qlex were 8.6 billion dollars, but overall performance was also affected by the timing of purchases.
Winrevair sales were 694 million dollars, above market expectations of approximately 650 million dollars; Gardasil sales were approximately 2 billion dollars, above expectations of approximately 1.81 billion dollars. Both were also affected by the purchase-timing factors mentioned above.
Conversely, after losing exclusivity, Bridion faced competition from US generics, and sales fell to 144 million dollars, 34% below market expectations. Lower adult pneumococcal vaccination rates and net prices offset the boost to Capvaxive from its launch progress; its sales were 263 million dollars, 17% below expectations.

The company narrowed its 2026 revenue guidance from 66.3 billion–67.3 billion dollars to 66.8 billion–67.3 billion dollars, raising the midpoint by 250 million dollars.
Non-GAAP earnings-per-share guidance was raised from 2.66–2.76 dollars to 2.77–2.82 dollars, even after incorporating a new charge of 0.12 dollars per share for the SciBrunch licensing deal. Bernstein believes the third-quarter beat and tax and currency factors all provided significant support for the increase.
The company lowered its full-year non-GAAP tax rate guidance from 35%–36% to 32%–33%; consequently, the improvement in earnings-per-share guidance did not come entirely from higher revenue guidance.

Positive phase 2b data for tulisokibart in hidradenitis suppurativa support advancement to phase 3; its program for systemic sclerosis-associated interstitial lung disease has been discontinued. Phase 3 ATLAS-UC data in ulcerative colitis are expected shortly, while the ARES-CD study in Crohn’s disease remains ongoing.
Early prescription trends and physician feedback for LIPFENDRA are positive, but expanding insurance coverage will take time, and it is not yet included in TrumpRx.
Intismeran is being prepared for a regulatory submission within 12 months; Bernstein is particularly focused on the phase-three study of sac-TMT/MK-2010 planned to start in the first half of 2027. The firm rates Merck “market perform” with a price target of 105 dollars.