Power Alley: Merck Q1 '25 Solidly Beats -- But Tangerine's Tariff Threats Cause $200 Million In Reduced EPS Guidance; Gardasil Still Sluggish In China.

While Rahway is chugging along solidly, on an organic basis with Keytruda still expanding its sales, globally -- the uncertainty around Trump's flip-flops on tariffs against China -- and President Xi's counter-moves. . . make it impossible to guess exactly where Merck will end in Q4 2025, on the EPS line. [But $200 million is immaterial to Merck, on a full year basis, to be clear. And all pharma will see similar charges -- across the board. Ugh.]

Moreover, because Trump has threatened separate tariffs on inbound pharma products (like those Merck makes in Ireland), but hasn't given even a whiff of what that might look like [if he ever even does any version of it -- as you may recall that he tucked tail (in 2017-18) on this issue, first time around -- after he was "angry" at Ken Frazier, for calling out racism by its name(!)], Merck will not set a reserve for a charge (yet) on that score.

Businesses. . . need to be able to see a stable path to what their government-imposed / regulatory costs are going to be. They hate uncertainty. And that is all Trump ever is -- the only certainty. . . is he will be wildly all-over-the-map, and chaotic. So, yes -- Trump is ruining a good Q1 for many a large public company. Charming. Here's the latest, from CNBC:

. . .Merck on Thursday lowered its full-year profit guidance, citing $200 million in estimated costs for tariffs and a charge tied to a recent deal.

The company now expects its 2025 adjusted earnings to come in between $8.82 and $8.97, down slightly from a previous outlook of $8.88 to $9.03 per share.

The company said the expected tariff charge primarily reflects levies between the U.S. and China, and Canada and Mexico to a lesser degree. Merck has built a robust presence in China, which is considered one of the company’s most important markets and is home to some of its partners and manufacturing and research and development sites.

Merck noted that the new outlook does not account for President Donald Trump’s planned tariffs on pharmaceuticals imported into the U.S., which is prompting some drugmakers to bolster their U.S. manufacturing footprints.

That includes Merck, which has invested $12 billion in U.S. manufacturing and research and development and expects to put more than $9 billion more into the country by the end of 2028. . . .

Sure thing, what a "very stable genius". Who voted for this BS?! Oh -- and Halozyme's patent suit on injectible Keytruda will be. . . immaterial to Merck, as well (it will settle, or perhaps even exonerate Merck). Out.

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