Merck Earnings Beat Estimates; More Acquisitions on Tap

Drug giant Merck & Co. Inc. (NYSE: MRK) reported first-quarter 2016 results before markets opened Thursday. The company posted adjusted diluted earnings per share (EPS) of $0.89 and revenues of $9.31 billion. In the same period a year ago, Merck reported EPS of $0.85 on revenues of $9.43 billion. First-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.85 and $9.46 billion in revenues.

Pharmaceutical sales were down 2% year over year; however, excluding currency exchange effects, sales were up 2%. Net income on a GAAP basis totaled $1.13 billion while non-GAAP net income totaled $2.49 billion. Non-GAAP net income excludes the impacts of $1.1 billion in expenses for the amortization of intangible assets related to acquisitions, $24 million related to the 2015 acquisition of Cubist Pharmaceuticals and $252 million in impairment charges on product intangibles.

In its financial outlook statement, Merck narrowed and raised the top end of its full-year adjusted EPS from a prior range of $3.60 to $3.75 to a new range of $3.65 to $3.77. The company also said its full-year revenues are expected to fall in a range of $39.0 billion to $40.2 billion, including an estimated 2% negative impact from currency exchange rates.
[recirclink id=330032]
Chairman and CEO Kenneth C. Frazier said:

Our first quarter’s performance sets us on a good course for the year. We remain focused on advancing our pipeline and driving the commercial success of our key launches and inline medicines and vaccines. Business development is a top priority, and we are actively pursuing the best external science through licensing or bolt-on acquisitions to bolster our pipeline and grow our company.

Since the beginning of the year, Merck’s stock is up 3.8%, but down about 9% over the past 12 months.

Shares of Merck’s stock traded up nearly 1% in Thursday’s premarket, at $55.30 in a 52-week range of $45.69 to $61.70. Thomson Reuters had a consensus analyst price target of $61.47 before the earnings report.