Earnings Preview: Merck

Merck (MRK) is expected to report Q3 earnings before market open Wednesday Oct. 22,with a conference call scheduled for 9:00 am ET.

Guidance

Analysts are looking for a profit of 79c on revenue of $5.99B. The consensus is 72c to 83c for EPS, and revenue of $5.88B to $6.19B, according to First Call. In its Q2 earnings release Merck reported EPS 86c compared to consensus of $83c and revenue of $6.1B compared to consensus of $6.05B.

Analyst Views

Positive influences on this earnings period could be strong sales in Januvia and increased sales in the company's cardiovascular drugs like Cozaar. Risks to earnings for the company include lower sales projections in its off patent portfolio like Fosamax.

On September 30, Leerink Swann lowered its estimates on Merck to reflect disappointing IMS Rx trends for Singulair and IMS sales trends for Gardasil. The firm questions Merck's ability to make 2010 guidance without more aggressive restructuring, downsizing or acquisitions. The firm maintained its Market Perform rating on the stock. On October 21, Leerink Swann remained skeptical about Merck's ability to meet its implied 2010 EPS guidance, and the firm believes that challenges to Gardasil and Singulair, as well as a lack of patents beginning in 2013 are an overhang on the shares. The firm reiterated its Market Perform rating.