Merck Earnings: A Mixed Picture

Falling revenue did not prevent S&P 500 (NYSE:SPY) component Merck & Co Inc. (NYSE:MRK) from reporting a profit boost in the third quarter. Merck is a global research-driven company that develops and manufactures a range of innovative pharmaceutical products to improve human and animal health.

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Merck & Co Inc. Earnings Cheat Sheet

Results: Net income for the large-cap pharmaceutical rose to $1.76 billion (56 cents per share) vs. $1.69 billion (55 cents per share) in the same quarter a year earlier. This marks a rise of 4.2% from the year-earlier quarter.

Revenue: Fell 4.4% to $11.49 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Merck & Co Inc. reported adjusted net income of 95 cents per share. By that measure, the company beat the mean estimate of 93 cents per share. It fell short of the average revenue estimate of $12.17 billion.

Quoting Management: “Our strong global sales this quarter offset the impact of the SINGULAIR patent expiry in the U.S.,” said Kenneth C. Frazier, chairman and chief executive officer of Merck. “We will continue to drive value for our customers and shareholders through Merck’s four-part strategy of executing on our core business, expanding geographically in high-growth markets, extending our complementary businesses and excelling at managing our costs while investing for growth. With our robust pipeline, we remain on target to submit multiple new products for marketing approval between now and the end of 2013, including suvorexant for insomnia, odanacatib for osteoporosis and TREDAPTIVE for multiple lipid parameters.”

Key Stats:

A year-over-year revenue decrease last quarter breaks a four-quarter streak of revenue increases. The best quarter in that span was the third quarter of the last fiscal year, which saw revenue rise 8.1%.

The company has now surpassed analyst estimates for four quarters in a row. It beat the mark by 4 cents in the second quarter, by 2 cents in the first quarter, and by 2 cents in the fourth quarter of the last fiscal year.

Looking Forward: The outlook for the company’s next-quarter performance is unfavorable. Estimates have gone down from an average 85 cents per share to 84 cents over the past seven days. At $3.81 per share, the average estimate for the fiscal year has fallen from $3.82 ninety days ago.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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