Merck Misses Estimates, Sales Drop

Updated from 8:42 a.m. EDT

Merck ( MRK) missed analysts' profit forecast for the first quarter, said that sales declined from a year earlier and lowered its full-year net earnings estimate because of costs related to the pending merger with Schering-Plough ( SGP).

Shares of the Whitehouse Station, N.J., drugmaker were down 6.1% at $23.69 recently.

Merck, one of five components of the Dow Jones Industrial Average reporting results Tuesday, said it earned 74 cents a share in the quarter, excluding items. On average, Wall Street analysts were predicting 77 cents.

After factoring in the items, Merck earned $1.46 billion, or 67 cents a share. A year earlier, the company made $3.33 billion, or $1.52 a share. The 2008 results included a $1.4 billion after-tax gain from a distribution from AstraZeneca ( AZN).

Biotech Select

Merck's sales, meanwhile, fell 8% to $5.39 billion. Unfavorable foreign-exchange rates and the loss of domestic marketing exclusivity for Fosamax, an osteoporosis drug, contributed to the decline in revenue. The consensus outlook was for $5.77 billion.

Schering-Plough also reported a year-over-year drop in sales, though its adjusted earnings exceeded projections.

While Merck reaffirmed its view that it will earn $3.15 to $3.30 a share this year, prior to counting certain items, the company cut its net profit estimate to a range of $2.84 to $3.09 a share as a result of expenses for the proposed merger.

Additionally, Merck reduced its revenue guidance to between $23.2 billion and $23.7 billion. Previously, it had projected $23.7 billion to $24.2 billion, and analysts are looking for $23.87 billion.

Outside of its numbers, Merck also said it will delay seeking U.S. approval for telcagepant, a migraine headache treatment. The company no longer expects to file a new drug application in 2009, and it will provide an updated timeline later.

Merck said the proposal to combine its operations with Schering-Plough is going as planned, and the companies expect to close the transaction in the fourth quarter.

The planned merger is one of a series of deals that has reshaped the pharmaceutical and biotech arena in recent months. The other, and bigger, blockbuster has Pfizer ( PFE) acquiring Wyeth ( WYE).

Among other pacts, Roche recently took over Genentech, in which it already owned a significant stake, and just this week GlaxoSmithKline ( GSK) said it has agreed to buy privately held Stiefel Laboratories.

More from Stocks

Inside Carnival's Mind Blowing New Horizon Cruise Ship (Video)

Inside Carnival's Mind Blowing New Horizon Cruise Ship (Video)

Neel Kashkari: The Heart of Our Financial System Is More Radioactive Than Ever

Neel Kashkari: The Heart of Our Financial System Is More Radioactive Than Ever

Finding Stocks Right for You: Cramer's 'Mad Money' Recap (Friday 8/25/18)

Finding Stocks Right for You: Cramer's 'Mad Money' Recap (Friday 8/25/18)

Flashback Friday: Amazon, Chip Stocks, Memorial Day

Flashback Friday: Amazon, Chip Stocks, Memorial Day

Week Ahead: Wall Street Looks to Jobs Report as North Korea Meeting Less Certain

Week Ahead: Wall Street Looks to Jobs Report as North Korea Meeting Less Certain