Join        Login             Stock Quote

Merk (NYS: MRK) Earnings Not Red Hot Anymore

 March 14, 2012 01:28 PM

Last Tuesday, pharmaceutical giant Merck & Co. (NYSE:MRK) posted its estimates of first-quarter profits, declaring that it would earn about 95 to 98 cents a share, excluding expenses associated to acquisitions and restructuring. This is slightly below the consensus estimate of $1.01 a share. The company also said that it expected its revenues this year "to be at or near 2011 levels on a constant currency basis. At current exchange rates, sales would be unfavorably affected by about 2-3%." (Merck's calculations are based on an exchange rate of $1.31/euro.)

After the announcement, the company stock fell nearly 3% to end at $37.44. While the stock subsequently recouped some of its losses, it was still down 0.87% for the week. Moreover, since peaking at $39.26 in mid-January, Merck has been on a downward trajectory.

[Related -Forest Laboratories, Inc. (NYSE:FRX): Should Astrazeneca Plc Buy Forest Labs?]

Nonetheless, while the company's first-quarter guidance was below expectations, it also reaffirmed its guidance for the whole year, in which it expects to earn $3.75-$3.85 a share in 2012. The company said it would continue the reduction of annual R&D costs by $900 million, while continuing investment in key programs.

Given the above, analysts generally remain sanguine about the company's growth prospects for this year. UBS analyst Marc Goodman kept a "buy" rating on Merck, saying that investors now have low expectations for the company, which could report positive results for several drug products over the next few quarters. These include the allergy and asthma treatment Singulair and diabetes medication Januvia. (In 2011, Singulair accounted for $5.48 billion or 11.4% of the company's total revenues.)

[Related -Mylan Inc (MYL): Patent Cliff Set To Fuel 200% Gain]

In addition, while Merck might have a reputation for having a weak pipeline, it still has 17 potential launches under development. Last Thursday, JPMorgan analysts wrote that "from an R&D budget standpoint, while Merck has a number of large outcomes studies currently running, the company is implementing a more disciplined approach to R&D that we believe could result in a more focused pipeline and lower expense levels over time."

iOnTheMarket Premium


Post Comment -- Login is required to post message
Alert for new comments:
Your email:
Your Website:

rss feed

Latest Stories

article imageGermany Is On The Rebound - Time To Buy?

Based on this year's 17% spike in the Stoxx Europe 600 Index, it seems investors have found a home in read on...

article imageIs Drought Risk In The American West An Economic Threat?

The historic and ongoing drought in California is getting harder to ignore in terms of its potential impact read on...

article imageFunds Behaving Badly

Discipline is still the key to read on...

article imageGenuine Parts Co. (GPC): This Company's Raised Dividends For 59 Years

There are 253 million cars and trucks driving along U.S. roads. And the average age of those automobiles is read on...

Popular Articles

Daily Sector Scan
Partner Center

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.