Earnings Preview: Merck

Merck (MRK) is expected to report Q4 earnings on Thursday, February 3 before the market open with a conference call scheduled for 8am ET.

Guidance

Analysts are looking for EPS of 83c on revenue of $11.52B. The consensus range is 79c-85c for EPS, and $11.20B-$11.93B for revenue, according to First Call. Positive catalysts for this quarter may be seen coming from further progress in the Schering acquisition and operational cost synergies from that combination. Drugs that may have driven revenue this quarter include Singulair, Januvia and Janumet as well as Remicade. Negative catalysts may be seen coming from continueing generic pipeline erosion from off patent drugs like Cozaar/Hyzaar and flat growth from Vytorin and Zetia.

Analyst Views

On January 18,Wells Fargo upgraded the Large Cap Pharmaceuticals sector to Overweight from Market Weight citing the potential for positive near-term pipeline news and trough valuations. The firm has an Outperform rating on Merck with a valuation range of $38-$42. On January 24, Deutsche Bank lowered its price target for Merck to $43 from $48 ahead of the company's Q4 results, but maintained a Buy rating on the stock.