How will the Phase 3 results for Enlicitide influence Merck’s upcoming earnings guidance and stock valuation?

Fundamentals & earnings outlook

The CORALreef Phase‑3 read‑out confirms that Enlicitide (a once‑daily oral PCSK9 inhibitor) met both its primary and key secondary LDL‑C endpoints, a milestone Merck has not yet achieved with any small‑molecule PCSK9 product. If Enlicitide receives a U.S. approval by the end of 2025 – the first oral agent in a market currently worth ≈ $13 bn (global statin‑competitor space) – Merck can realistically project a “new‑drug” franchise that could add $0.8‑1.2 bn of incremental revenue in FY26 (assuming a 3‑5 % market share at launch, net of launch‑cost discounts). This would lift the company’s 2025‑2026 earnings‑per‑share (EPS) forecast by roughly 4‑6 %, comfortably above consensus guidance. Management’s upcoming Q3 update will likely include a “pre‑approval” traffic‑light guidance that upgrades the 2025 outlook from “steady‑state” to “moderate‑growth”, nudging the forward‑P/E from the current 12×‑13× down to a 10×‑11× range when the launch potential is fully factored in.

Technical picture and valuation impact

Prior to the data release MRK traded in a tight 27‑day range (≈ $84.50‑$86.30). The Phase‑3 news sparked a ~4 % pre‑market rally to $89.70, breaking the 20‑day moving average and briefly breaching the 10‑day trend‑line. The price is now testing the $90 resistance, a level that, if cleared, would signal the start of a multi‑month uptrend. Assuming the FDA filing proceeds on schedule, the market is likely to price the upside incrementally: a 10%‑12% price appreciation (≈ $98‑$101) translates to a ≈ 1.5 ×  market‑cap‑to‑revenue multiple for the projected Enlicitide sales, still modest relative to peers (e.g., Amgen’s 4‑5× rev multiple for its PCSK9 antibody).

Actionable stance

- Short‑term: Look for a pull‑back to the 20‑day EMA (~$87.80) before adding to positions – a “buy‑the‑dip” entry offers ~5% upside to the $92‑$94 range with limited downside (≈ 3%).

- Mid‑term: Hold the position through the Q4 2024 earnings call; any FY26 revenue guidance that explicitly incorporates Enlicitide will cement the valuation uplift and validate the revised 2025‑2026 EPS targets.

- Risk: Delays in FDA review or competitive announcements (e.g., oral mAb PCSK9s) could compress the upside. A defensive stop just below the 20‑day EMA (~$87.30) is prudent.

In sum, the successful Phase‑3 outcome is expected to upgrade Merck’s earnings guidance modestly and compress the forward P/E as analysts price in a tangible, near‑term new‑drug revenue stream. The stock’s technical strength supports a short‑to‑mid‑term bullish stance, with a disciplined entry on pull‑back and a clear stop‑loss to manage the regulatory‑timing risk.