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Guidance Trips Up Merck

Shares are falling early.
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Shares of


(MRK) - Get Free Report

were slipping early Tuesday after the New Jersey-based drugmaker offered an earnings projection for next year that's below analysts' estimates.

For 2007, Merck reaffirmed its forecast for a profit before items of $3.08 to $3.14 a share. That's the same range it provided in October, but since then Wall Street's consensus expectation has increased by 8 cents and now stands at $3.15.

In 2008, Merck is planning on earnings, excluding items, of $3.28 to $3.38 a share, but on average, analysts surveyed by Thomson Financial are calling for $3.39.

Merck was off 2.8% at $57.15 in premarket trading.

This year's earnings after all items are included will likely be $1.45 to $1.51, Merck said. The biggest component of the difference between that and the adjusted number relates to the pretax $4.85 billion charge Merck will take as part of its agreement to settle the majority of the lawsuits it's facing over Vioxx.

Merck said it continues to anticipate compound annual revenue growth of 4% to 6% for the 2005 to 2010 timeframe. It also said it remains on track to post double-digit compound annual earnings-per-share growth for the same period.