Schering-Plough's Q3 Net Doubles, But Falls Short of Estimates

Schering-Plough reported a more than doubling of third-quarter net income to $750 million, or $0.45/share, but adjusted EPS (ex-acquisition related items and an upfront R&D expense) of $0.28 was two cents short of analysts' average estimate. Sales growth of 9.2% to $2.81B also missed analyst expectations of $2.87B. However, sales would have totaled $3.5B (+12% y/y) if Schering-Plough included sales of Vytorin and Zetia, which are sold jointly with Merck and accounted for under the equity method. Total sales of Vytorin and Zetia climbed 26% to $1.3B. In a statement, CEO Fred Hassan commented, "Our (long-term) strategy to grow the top line, exercise financial discipline and expand our R&D pipeline again delivered strong results" (full earnings call transcript later today). Schering-Plough is currently in the process of acquiring Akzo Nobel NV's Organon unit (pending U.S. antitrust approval) for $14.4B and expects to complete the transaction by year's end. The Organon unit is one of the world's largest makers of birth control pills and is viewed by management as a way to diversify the company's revenue sources. Schering-Plough lost 0.7% to $32.71 on Friday and was last down 1.4% to $32.25 in thin pre-market trading Monday.

Sources: Press release, MarketWatch, Reuters
Commentary: Are Pharmaceutical Companies Investable? • S&P 500 Stocks With the Highest Estimated Growth Rates • Jim Cramer's Take on SGP
Stocks to watch: SGP, MRK. Competitors: GSK, JNJ, SNY. ETFs: PPH, XPH, IHE, XLV

Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.