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Merck Sinks on Januvia Concerns

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Merck Sinks on Januvia Concerns

On Monday morning pharmaceutical and biotechnology giant, Merck (NYSE:MRK) reported its third quarter results. Over the last year anything and everything with healthcare exposure has seemed to do well. Merck which has been a staple of many investors portfolio has performed well by itself this year. The company reported better than anticipated third quarter earnings, helped by cost cutting implemented in recent months. However, sales of its Januvia diabetes treatment fell, raising concerns about the growth potential for the company’s biggest product.

Diabetes has been a bright spot for the company in recent years. Merck has established a deep portfolio of phase treatments for the disease. Should this business segment see pressure, weakness could be felt across the company. Merck earned $1.12 billion, or 38 cents per share, in the quarter. These results fell short of last year numbers where the company reported earnings of $1.73 billion, or 56 cents per share.

Excluding special items, Merck earned 92 cents per share. These results came in better than the street had expected. Analysts, on average, expected 88 cents per share. Sales fell 4 percent to $11.03 billion, below analyst expectations of $11.12 billion. A stronger dollar, which lowers the value of sales in overseas markets, helped save the results by 2 percent. Merck stated it expects full-year earnings of $3.48 to $3.52 per share, excluding special items. Early this month, it forecast $3.45 to $3.55 per share.

Shares of the company are higher by 13.5 percent so far this year. In early session trading shares of the company were down by over $1, or 2.5 percent, to $45.44 at the time of this writing. Going into the rest of the week, I would expect to see a number of analyst comments and adjustments following the report.

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