Merck Raises EPS Outlook After Q2 Earnings

Health and Healthcare

Published: July 29, 2016 8:20 am

Last Updated: January 13, 2020 5:08 am

Drug giant Merck & Co. Inc. (NYSE: MRK) reported second-quarter 2016 results before markets opened Friday. The company reported quarterly adjusted diluted earnings per share (EPS) of $0.93 and revenues of $9.84 billion. In the same period a year ago, Merck reported EPS of $0.86 on revenues of $9.79 billion. Second-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.91 and $9.78 billion in revenues.

Pharmaceutical sales rose 2% year over year, irrespective of currency exchange effects. Net income on a GAAP basis totaled $1.21 billion, while non-GAAP net income totaled $687 million. Non-GAAP net income excludes the impacts of $1.12 billion in expenses related to acquisitions and divestitures, $18 million in marketing and administrative expenses, and $207 million in R&D costs.

In its financial outlook statement, Merck raised the lower end of its full-year adjusted EPS estimate from $3.60 to $3.67. The top end of the range rose from $3.75 to $3.77. Revenue guidance remained at $39.1 billion to $40.1 billion.

Consensus estimates for the third quarter call for EPS of $0.98 and revenues of $10.07 billion. For the full year, analysts are looking for EPS of $3.72 and revenues of $39.49 billion.

Chairman and CEO Kenneth C. Frazier said:

Our results this quarter reflect our strategic focus on key launches, including KEYTRUDA and ZEPATIER, as well as our priority inline programs. We remain committed to advancing our pipeline, delivering a balanced and differentiated portfolio, and achieving long-term, sustainable growth.

Since the beginning of the year, Merck stock trades up about 10.6%, well above the Dow Jones Industrial Average gain of 5.9%. Over the past 12 months, however, Merck stock trades down about 0.2%, compared with a Dow gain of 4%.

Shares of Merck’s stock traded up nearly 1.5% in Friday’s premarket, at $59.30 in a 52-week range of $45.69 to $60.07. Thomson Reuters had a 12-month price target of $61.90 before the report.