Merck and Pfizer Earnings Highlight Pharma’s Split Market Reaction

Investors are weighing near-term earnings strength against longer-term transition risks.

Merck (MRK) and Pfizer (PFE) both delivered fourth-quarter earnings that exceeded expectations, but their updates were met with different market reactions as investors focused on forward guidance, product mix shifts, and post-pandemic normalization trends.

Key Points

Earnings beats met cautious guidance

• Both companies exceeded fourth-quarter earnings and revenue expectations.
• Full-year 2026 guidance from both firms came in below analyst consensus.
• Stock reactions diverged as investors reassessed sector-wide visibility.

What Did Merck Report in the Fourth Quarter?

Merck reported fourth-quarter adjusted earnings of $2.04 per share and revenue of $16.4 billion, exceeding analyst expectations. Full-year revenue topped $65 billion, supported primarily by oncology, which remained the company’s largest contributor.

Sales of Keytruda, Merck’s flagship cancer therapy, rose 7% to $8.4 billion in the quarter and nearly $32 billion for the full year. That strength was partially offset by a sharp decline in Gardasil vaccine sales, which fell 34% due to weaker demand in China and Japan.

Despite the earnings beat, Merck’s 2026 outlook came in below consensus. The company projected adjusted earnings of $5.00 to $5.15 per share and revenue of $65.5 billion to $67 billion, reflecting acquisition-related charges and anticipated headwinds from pricing and competition.

Why Did Pfizer Shares Decline Despite an Earnings Beat?

Pfizer reported fourth-quarter adjusted earnings of 66 cents per share and revenue of $17.6 billion, both above Wall Street expectations. However, revenue declined on an operational basis as demand for Covid-related products continued to fade.

The company reaffirmed its 2026 guidance, calling for revenue of $59.5 billion to $62.5 billion and adjusted earnings of $2.80 to $3.00 per share, below analyst projections. Management reiterated that Covid-linked revenue is expected to decline further next year.

Investors also weighed mixed reactions to Pfizer’s weight-loss drug trial data and the competitive landscape in obesity treatments. The combination of softer guidance and lingering uncertainty around growth drivers contributed to the stock’s decline.

How Are Investors Reading the Pharmaceutical Sector?

Together, the reports offered a snapshot of a sector in transition. Oncology remained a point of strength for both companies, helping offset declines in vaccines and Covid-era products.

At the same time, guidance resets underscored ongoing uncertainty around pricing pressure, patent expirations, and the pace at which newer products can scale. The contrasting stock reactions reflected how markets are differentiating between near-term execution and longer-term visibility.

What It Means for Investors

The market reaction to Merck and Pfizer highlights a broader theme across healthcare stocks. Earnings beats alone have not been enough to drive sustained gains when forward guidance signals slower growth or added costs.

For investors, the reports emphasize the importance of product mix and pipeline development as legacy revenue streams decline. The sector’s defensive reputation remains intact, but expectations are increasingly tied to execution through multi-year transitions rather than single-quarter results.

Conclusion

Merck and Pfizer both delivered solid fourth-quarter earnings, but cautious 2026 outlooks shaped market reactions. The divergence in share performance reflects how investors are balancing current profitability against longer-term structural changes across big pharma.

FAQs

Did Merck beat earnings expectations in the fourth quarter?
Yes, Merck reported adjusted earnings of $2.04 per share and revenue of $16.4 billion, both above expectations.

Why did Merck’s guidance weigh on sentiment?
Merck’s 2026 earnings and revenue outlook came in below analyst consensus due to acquisition-related charges and anticipated headwinds.

Did Pfizer exceed fourth-quarter estimates?
Yes, Pfizer reported earnings and revenue that exceeded Wall Street estimates for the quarter.

Why did Pfizer stock fall after earnings?
Pfizer’s shares declined as investors focused on below-consensus 2026 guidance and continued declines in Covid-related revenue.

What trend did both reports highlight?
Both reports highlighted a shift toward oncology growth while legacy products face pricing pressure and declining demand.

This article was created with AI assistance and reviewed by an editor. For details, please refer to our Terms of Use.

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