Merck Lifts Outlook as Process Solutions Powers Through Currency Headwinds and Healthcare Weakness

Merck raised 2026 guidance after Q1 organic sales grew 2.9%, led by Process Solutions (+16.2%) and Life Science (+8.3%). Healthcare slipped, but guidance boost and new CEO's plans drive stock rally. Analysts see €150 target.

Merck shares extended their rally into Wednesday, rising over 6% to around €121.60 after the Darmstadt-based group raised its full-year guidance on the back of a robust first quarter. The stock had initially jumped as much as 8% on Tuesday, when the market absorbed the news that organic sales growth in its key Process Solutions and Life Science units easily compensated for a weak healthcare performance and negative currency effects.

The revised forecast now calls for net sales of €20.4bn to €21.4bn in 2026, up from the previous range. Adjusted EBITDA is expected to land between €5.7bn and €6.1bn. The upgrade underscores management’s confidence that the operational momentum in material sciences and life science tools can sustain even as macroeconomic uncertainty and a stronger euro weigh on reported numbers.

Behind the headline, the first-quarter results revealed a clear split in fortunes across Merck’s divisions. Reported revenue fell 2.8% to €5.1bn, dragged down by unfavorable exchange rates. Yet on an organic basis, sales climbed 2.9%, and adjusted EBITDA reached €1.53bn — comfortably ahead of consensus. The star performer was Process Solutions, which delivered organic growth of 16.2%, while the broader Life Science segment notched an 8.3% organic increase. Healthcare, by contrast, saw organic revenue slip 3.4%, hurt by the loss of US exclusivity for multiple-sclerosis drug Mavenclad.

The strong showing came in the first quarter under new chief executive Kai Beckmann, who took the helm in May. Beckmann has already signaled a strategic rejig of the operating model, promising adjustments to sharpen focus on the higher-growth segments. Analysts have responded favorably: JPMorgan reiterated its “Overweight” rating with a €150 price target, and UBS also recommends the stock with the same target. The average analyst target sits well above the current level, implying significant upside if the operational momentum holds.

Not everything shone in the quarter. Net income fell about 9% year-on-year to €669m, and adjusted earnings per share came in at €2.11. The market, however, chose to look past the profit decline, zeroing in on the guidance raise and the robust organic trajectory. The stock has now pushed back above its 200-day moving average of €116.32, though it remains below the 52-week peak of €131.85 and is roughly flat year-to-date.

For now, Merck presents an intriguing case: a defensive healthcare and specialty-chemicals play that is showing enough growth in its cyclical segments to offset a fading blockbuster and currency noise. The question is whether Beckmann’s impending operational overhaul can accelerate the re-rating that many analysts already anticipate.