Schering-Plough Says Goodbye to a Brutal Year

All this bad news adds up to a year to forget for Schering-Plough. The company's $1.42 per share in 2002 earnings represents a 10% fall from 2001 results. Looking ahead, the company did not reiterate its previous guidance for a 2003 earnings range of $1.00 to $1.15 per share. Analysts are expecting 2003 earnings of $1.03 per share.

Furthermore, Schering-Plough is still seeking a new chief executive after current CEO Richard Kogan announced his retirement in November. Various media reports do say, however, that the company is close to naming Pharmacia CEO Fred Hassan as its new leader. Hassan is said to be leaving Pharmacia and interested in a new challenge now that the company's merger with Pfizer is nearing completion.

Deutsche Bank analyst Barbara Ryan believes the key to Schering-Plough's future is Zetia, the new cholesterol-lowering drug that was approved for sale in the U.S. in October. (Zetia is co-marketed by Merck(MRK Quote).) Ryan is forecasting Zetia sales of $350 million in 2003 and peak sales of $2 billion, especially if the companies get approval for a combination a Zetia/Zocor pill. Zetia sales were $23 million in the fourth quarter.

"The 'story' on Schering-Plough is 2004 and beyond, at which point Zetia and Zetia/Zocor could be driving 20%-plus earnings per share growth," she wrote in a recent research note. Ryan rates Schering-Plough a buy and her firm doesn't have a banking relationship with the company.

UBS Warburg analyst C.J. Sylvester is forecasting Zetia revenue of $200 million in 2003, but he rates Schering-Plough a neutral because the 2003 earnings outlook is still rather opaque. Sylvester's firm doesn't have a banking relationship with the company.

Shares of Schering-Plough closed Wednesday at $20.75.