Merck Acquisition Overshadows Terns Pharmaceuticals Earnings as Biotech Reports Tomorrow

Terns Pharmaceuticals (TERN) reports fourth-quarter 2025 earnings on March 26, but the release arrives amid extraordinary circumstances: Merck announced a $6.7 billion acquisition of the company just hours before the scheduled report. The earnings data will provide a final snapshot of TERN as an independent entity, though the acquisition has already sent shares soaring and fundamentally altered the investment thesis.

Part 1: Earnings Preview

Terns Pharmaceuticals is a clinical-stage biopharmaceutical company focused on developing therapies for oncology and metabolic diseases, with a particular emphasis on chronic myeloid leukemia (CML) through its lead candidate TERN-701. The company also has programs targeting non-alcoholic steatohepatitis (NASH) and obesity.

Analysts expect TERN to report a loss of $0.29 per share for the fourth quarter of 2025, with 6 analysts providing estimates ranging from -$0.33 to -$0.28. The company most recently reported a loss of $0.27 per share for the third quarter of 2025. Compared to the same quarter last year, when TERN lost $0.24 per share, the consensus estimate represents a 20.83% increase in losses year-over-year.

Three key themes define this earnings story:

Merck Acquisition Dominance: The $6.7 billion takeover announced March 25 completely overshadows the earnings release itself. Merck is acquiring TERN primarily for TERN-701, seeking to expand its hematology pipeline ahead of Keytruda's 2028 patent expiration. The deal values TERN's clinical pipeline and validates its oncology approach, though it renders traditional earnings analysis largely academic.

Clinical Pipeline Progress: Before the acquisition news, investors were focused on advancement of TERN-701 in chronic myeloid leukemia trials and the company's NASH programs. Any updates on clinical trial enrollment, data readouts, or regulatory milestones in the earnings release will provide context for Merck's valuation of the assets.

Cash Runway and Burn Rate: As a clinical-stage biotech, TERN's quarterly cash burn and remaining runway were critical metrics for independent operation. The earnings report will show the company's financial position at year-end 2025, though the Merck deal eliminates going-concern considerations.

Analyst commentary ahead of the release has been overtaken by acquisition analysis, with 11 of 12 analysts rating the stock a Strong Buy and a mean price target of $58.11 — though these targets now reflect acquisition probability rather than standalone fundamental value.

Part 2: Historical Earnings Performance

TERN has established a consistent pattern of beating earnings estimates over the past four quarters, exceeding consensus in every report. The company beat by 20.00% in Q4 2024, followed by beats of 10.34%, 7.14%, and 10.00% in the subsequent three quarters.

The magnitude of beats has been meaningful, averaging around 12% above estimates, though the absolute improvement in losses has been modest — ranging from $0.02 to $0.06 better than expected. This pattern suggests management has maintained better expense discipline than analysts anticipated, or that R&D spending has come in below projections. The consistency of beats across four consecutive quarters indicates either conservative analyst modeling or effective cost management by the company.

The trend in actual reported losses shows relative stability, with quarterly losses ranging from $0.24 to $0.27 over the past year, demonstrating controlled burn rate despite ongoing clinical development activities.

Note: These figures reflect diluted GAAP earnings per share, reported before non-recurring items, and may differ from the non-GAAP figures used by some sources.

Part 2.1: Price Behavior Around Earnings

TERN typically reports earnings during market hours or after market close, meaning Day 0 captures immediate market reaction while Day +1 reflects follow-through trading.

Historical price behavior shows moderate volatility around earnings releases, with an average absolute Day 0 move of 3.47% and Day 0 trading range of 8.25%. The Day +1 follow-through has been more pronounced, averaging 4.93% with an 11.54% trading range, suggesting investors often reassess positions after digesting the full report.

The direction of moves has been mixed, with no clear pattern of post-earnings rallies or selloffs. The most recent report in November 2025 saw a 3.52% gain on Day 0 followed by a 7.64% rally on Day +1, while earlier reports showed varied reactions. The largest single-day move was a 7.30% gain the day after the March 2024 report, demonstrating the stock's capacity for significant post-earnings swings.

Part 2.2: Options Market Expected Move

The options market is pricing a 4.10% expected move for the upcoming earnings release, which sits above the historical average Day 0 move of 3.47% but below the average Day +1 move of 4.93%. However, the Merck acquisition announcement has likely rendered this expected move calculation obsolete, as the options pricing was established before the transformative deal was revealed.

Part 3: What Analysts Are Saying

Analysts maintain an overwhelmingly bullish stance on TERN, with the current consensus showing 11 Strong Buy ratings, 0 Moderate Buys, 1 Hold, and no Sell ratings. The average recommendation of 4.83 on the 5-point scale reflects near-universal enthusiasm, though this sentiment was established before the Merck acquisition announcement.

The mean price target of $58.11 represents approximately 10% upside from the current price of $52.86, with estimates ranging from a low of $54.00 to a high of $70.00. The relatively tight range of targets suggests broad agreement on valuation, though these targets were set for TERN as a standalone entity.

Analyst sentiment has remained unchanged over the past month according to the trend indicator, with the Strong Buy count holding steady at 11 and the single Hold rating persisting. The stability in ratings reflects confidence in the clinical pipeline and business model that existed before Merck's interest became public.

The consensus price target implies modest upside under normal circumstances, but the acquisition context has fundamentally altered the risk-reward calculus — the deal terms will now determine shareholder value rather than standalone fundamental performance.

Part 4: Technical Picture

TERN enters earnings with exceptionally strong technical momentum, reflected in the Barchart Technical Opinion showing a 100% Buy signal currently, up from 88% Buy a month ago. The stock has strengthened significantly in recent weeks, with the signal reaching maximum bullish intensity.

Timeframe Analysis:

• Short-term (100% Buy): Maximum buy signal indicates powerful near-term momentum, amplified by acquisition news
• Medium-term (100% Buy): Strong buy signal across the intermediate timeframe confirms the uptrend is well-established beyond just recent sessions
• Long-term (100% Buy): Maximum long-term buy signal reflects the dramatic transformation in the stock's trajectory over the past year

Trend Characteristics: The signal strength is characterized as Strong with direction in the Top 1%, indicating TERN is exhibiting some of the most powerful bullish momentum in the entire market heading into earnings.

The stock is trading above all major moving averages, including the 5-day ($49.99), 10-day ($48.10), 20-day ($45.57), 50-day ($40.58), 100-day ($36.01), and 200-day ($21.20). This complete alignment with all moving averages above the stock confirms a powerful uptrend across all timeframes.

The technical setup is extraordinarily supportive, though the Merck acquisition has fundamentally changed what these indicators mean. The stock's position above all moving averages and maximum bullish signals reflect the acquisition premium rather than organic technical strength. The 200-day moving average at $21.20 versus the current $52.86 price illustrates the magnitude of the year-long rally that culminated in the buyout announcement. Traditional support and resistance levels have become largely irrelevant as the stock now trades based on deal completion probability rather than technical patterns.