Key Highlights
- Merck KGaA reported Q1 net earnings of €669 million, representing a 9.4% year-over-year decline, yet delivered earnings per share of €2.11, surpassing analyst expectations of €1.99.
- Revenue decreased 2.8% to €5.13 billion, exceeding the consensus estimate of €5.09 billion.
- Management elevated its 2026 adjusted EBITDA forecast to a range of €5.7–€6.1 billion from the previous €5.5–€6.0 billion projection.
- The Electronics segment emerged as a key growth driver, fueled by robust demand for materials supporting AI and advanced computing applications.
- The anticipated arrival of generic versions of Mavenclad, a multiple sclerosis treatment, was postponed from March to May, providing additional revenue protection for the Life Science division.
Merck KGaA delivered first-quarter results on Wednesday that exceeded lowered expectations, sending shares up 8% to levels not seen in two months. While profitability declined year-over-year, the pharmaceutical and technology giant outperformed on both bottom-line and top-line metrics.
The company reported net earnings of €669 million, marking a 9.4% decrease compared to the prior-year quarter, translating to €2.11 per share — comfortably above the €1.99 consensus forecast. Revenue fell 2.8% to €5.13 billion, narrowly beating analyst projections of €5.09 billion. Currency fluctuations created headwinds, though core business momentum proved more resilient than anticipated.
Investors reacted positively to management’s decision to increase its full-year 2026 financial targets.
The revised adjusted EBITDA guidance now stands at €5.7 billion to €6.1 billion, an upgrade from the earlier €5.5 billion to €6.0 billion range. Revenue projections for the year were established at €20.4 billion to €21.4 billion. The outlook for organic sales growth was improved to 0%–3%, up from the previous -1% to 2% forecast.
Electronics Segment Shines Bright
Merck’s Electronics division delivered an impressive quarterly performance. Strong demand for specialized materials used in cutting-edge semiconductor manufacturing — especially those supporting AI infrastructure and high-performance computing applications — generated robust revenue growth.
While this trend has been building for some time, the ongoing AI boom continues to provide sustained momentum for this business unit.
Adjusted EBITDA for the first quarter reached €1.53 billion, declining only 0.3% and significantly exceeding the analyst consensus of €1.46 billion.
Life Science Receives Reprieve
The Life Science segment also delivered results that topped forecasts. Sales increased 8.3% on a currency-adjusted basis, partially attributed to one customer establishing a new distribution facility and others building inventory buffers amid supply chain challenges stemming from the Iran conflict.
Merck had earlier cautioned that revenues from Mavenclad, its multiple sclerosis medication, would face pressure starting in March when generic alternatives entered the U.S. market. This timeline has since been extended to May, providing the division with several additional weeks of uncontested sales.
To compensate for eventual Mavenclad revenue erosion, the company is banking on treatments for uncommon cancers obtained through its $3.9 billion acquisition of SpringWorks Therapeutics completed last year.
Morgan Stanley analyst Thibault Boutherin indicated he anticipates Merck will outperform peers following the strong Q1 showing, noting that implied full-year figures, incorporating improved foreign exchange conditions, point to roughly 1% upside versus consensus EBITDA and EPS projections.
These results also represent an encouraging start for newly appointed CEO Kai Beckmann, who was elevated from his previous role leading the electronics business earlier this month.
Organic earnings per share guidance was upgraded to €7.50–€8.20 from €7.10–€8.00, while the EBITDA organic growth outlook improved to -2% to 2% from the earlier -4% to 1% range.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
