How Will Merck Stock React To Its Upcoming Earnings?

Merck (NYSE:MRK) is scheduled to release its earnings report on Thursday, April 24, 2025. Historical data suggests a potential negative reaction in MRK stock following the announcement. Over the past five years, the stock has experienced a negative one-day return after earnings in 65% of cases, with a median decline of -2.4% and a maximum drop of -9.8%.

While the actual market response will depend on how Merck’s results compare to consensus estimates and investor expectations, understanding these historical patterns could offer an edge for event-driven traders. Two potential strategies emerge: first, traders can assess the historical probability of a negative reaction and position themselves before the earnings release. Second, they can analyze the correlation between immediate and medium-term returns after the announcement, and adjust their positions accordingly.

Current consensus estimates anticipate earnings per share of $2.14 on revenues of $15.31 billion. This compares to the previous year’s earnings of $2.07 per share on sales of $15.78 billion. While Merck’s newer drugs, Winrevair and Capvaxive, are expected to continue gaining market share, sales of Gardasil are projected to decrease due to ongoing declines in China. Additionally, increased competition is likely to put pressure on sales of Januvia and Janumet. Although Keytruda is expected to be a significant growth driver, overall revenues are anticipated to decline in the first quarter.

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Merck’s Historical Odds Of Positive Post-Earnings Return

Some observations on one-day (1D) post-earnings returns:

• There are 20 earnings data points recorded over the last five years, with 7 positive and 13 negative one-day (1D) returns observed. In summary, positive 1D returns were seen about 35% of the time.
• Notably, this percentage increases to 45% if we consider data for the last 3 years instead of 5.
• Median of the 7 positive returns = 1.9%, and median of the 13 negative returns = -2.4%

Additional data for observed 5-Day (5D), and 21-Day (21D) returns post earnings are summarized along with the statistics in the table below.

MRK 1D, 5D, and 21D Post-Earnings Return

Correlation Between 1D, 5D, and 21D Historical Returns

A relatively less risky strategy (though not useful if the correlation is low) is to understand the correlation between short-term and medium-term returns post earnings, find a pair that has the highest correlation, and execute the appropriate trade. For example, if 1D and 5D show the highest correlation, a trader can position themselves “long” for the next 5 days if 1D post-earnings return is positive. Here is some correlation data based on 5-year and 3-year (more recent) history. Note that the correlation 1D_5D refers to the correlation between 1D post-earnings returns and subsequent 5D returns.

MRK Correlation Between 1D, 5D and 21D Historical Returns

Is There Any Correlation With Peer Earnings?

Sometimes, peer performance can have influence on post-earnings stock reaction. In fact, the pricing-in might begin before the earnings are announced. Here is some historical data on the past post-earnings performance of Merck stock compared with the stock performance of peers that reported earnings just before Merck. For fair comparison, peer stock returns also represent post-earnings one-day (1D) returns.

MRK Correlation With Peer Earnings

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