Earnings Preview: Merck & Co.

Merck (MRK) is expected to report Q2 earnings Monday, July 21 before market open,  with a conference call scheduled for 9:00 am ET.

Guidance

Analysts are looking for a profit of 83c on revenue of $6.05B. The consensus range is 80c to 85c for EPS, and revenue of $5.86B to $6.19B, according to First Call.

In its Q1 earnings release Merck reported EPS 89c compared to a consensus of $85c and revenue of $5.81B compared to consensus of $6.12B.

Analyst Views

Positive influences on this earnings period include strong sales in Vaccines and Singulair. Risks to earnings for the company include generic competition and slower sales of Vytorin and Zetia, which most likely will still be affected adversely by unfavorable past trial data.

In a research note on July 7, UBS downgraded Merck to Neutral from Buy. The firm downgraded the stock citing slowing Gardasil trends and vaccine supply issues and lowered its target to $40 from $43.

On July 10, Leerink Swann noted that there will likely be continued scrutiny of Januvia's skin safety, possibly creating an overhang on Merck's stock. However, the firm thinks a bolded warning on the product will only have a modest effect on Januvia's sales, and they maintained their Outperform rating on Merck.