Key insights
- Merck KGaA reported better-than-expected Q1 earnings driven by strong semiconductor demand, particularly for AI and high-performance computing applications. The company raised its FY26 guidance, citing strength in Life Sciences. Morgan Stanley anticipates Merck shares to outperform due to the profit beat and upgraded organic guidance. While the direct impact on US equities is limited, it signals continued strength in the semiconductor sector, a key component of the US market.
Investing.com-- Germany’s Merck KGaA (ETR:MRCG) reported a smaller-than-expected decline in its first quarter earnings on Wednesday, as the healthcare and electronics giant benefited from strong demand for its semiconductor offerings.
The company also slightly hiked its guidance for fiscal 2026 (FY26), citing strength in its Life Science division.
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Merck’s net profit fell 9.4% year-on-year to 669 million euros in the three months to March 31, or 2.11 euros per share. The print was stronger than Investing.com forecasts for EPS of 1.99 euros per share.
Net sales fell 2.8% year-on-year to 5.13 billion euros, beating estimates of 5.09 billion euros.
Merck said that while its overall earnings were impacted by unfavorable foreign exchange conditions, it clocked strong demand across its three key portfolios.
Electronics in particular was a strong performer, as demand was supported by advanced semiconductor applications, especially for materials used in artificial intelligence and high-performance computing.
Merck also flagged strong momentum in its Life Sciences division, especially due to delayed competitive pressures for its multiple sclerosis drug Mavenclad.
The company forecast earnings before interest, tax, depreciation and amortization of between 5.7 billion and 6.1 billion euros, a slight hike from its prior forecast of 5.5 billion to 6.0 billion euros.
Merck also forecast 2026 net sales of between 20.4 billion and 21.4 billion euros.
Organic sales growth outlook was raised to 0%-3% from -1% to 2%, EBITDA organic growth to -2% to 2% from -4% to 1%, and EPS to 7.50-8.20 from 7.10-8.00 euros.
"We expect Merck shares to outperform on a Q1’26 profit beat and FY26 organic guidance upgraded across the group and the 3 divisions," Morgan Stanley analyst Thibault Boutherin said.
"Implied FY26 numbers including better FX imply 1% upside to consensus EBITDA and EPS," he noted.
Vahid Karaahmetovic contributed reporting.