Sell Merck Stock Ahead Of Its Upcoming Earnings?
Merck (NYSE:MRK) is set to reveal its earnings on Tuesday, July 29, 2025. Historically, MRK stock has exhibited a trend of negative one-day returns following earnings announcements. In the past five years, the stock saw a decline on the day following earnings in 60% of occurrences. The median one-day drop was -2.1%, with the largest single-day decrease reaching -9.8%.
Although the actual results relative to consensus estimates will be significant, recognizing these historical patterns can give an edge to event-driven traders. There are two main strategies to utilize this information:
Analysts anticipate earnings of $2.03 per share on revenue of $15.87 billion for the forthcoming quarter. This indicates a slight reduction compared to the earnings of $2.28 per share on sales of $16.11 billion from the same quarter last year. This expected decrease in sales is primarily due to ongoing difficulties faced by Gardasil in China, despite the continued growth in Keytruda sales. Additionally, see – Merck's Keytruda Dependency: A Growth Story With An Expiration Date.
From a fundamental viewpoint, Merck currently has a market capitalization of approximately $212 billion. Over the past twelve months, the company generated $64 billion in revenue, and was operationally profitable with $20 billion in operating profits and a net income of $17 billion.
That being said, if you are looking for upside with lower volatility than individual stocks, the Trefis High Quality portfolio offers an alternative — having outperformed the S&P 500 and produced returns exceeding 91% since its inception.
View earnings reaction history of all stocks
Merck's Historical Odds Of Positive Post-Earnings Return
Insights on one-day (1D) post-earnings returns:
Additional data for the 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 low-risk strategy (though not beneficial if the correlation is weak) is to understand the relationship between short-term and medium-term returns after earnings, identify a pair with the highest correlation, and execute the suitable trade. For instance, if 1D and 5D exhibit the strongest correlation, a trader can position themselves 'long' for the next 5 days if the 1D post-earnings return is positive. Here is some correlation data based on 5-year and more recent 3-year 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?
Occasionally, the performance of peers can influence the post-earnings reaction of stocks. In fact, the pricing-in might start ahead of the earnings announcement. Below is some historical data comparing Merck's post-earnings performance with that of peers who reported earnings just prior to Merck. For a fair comparison, peer stock returns also represent post-earnings one-day (1D) returns.
MRK Correlation With Peer Earnings
Find out more about Trefis RV strategy that has outperformed its all-cap stocks benchmark (a combination of all 3, the S&P 500, S&P mid-cap, and Russell 2000), delivering strong returns for investors. Alternatively, if you desire upside with a smoother experience than an individual stock like Merck, consider the High Quality portfolio, which has surpassed the S&P, achieving >91% returns since inception.
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