Merck & Co. Inc.
) to beat earnings expectations when it reports first-quarter
2013 results before the opening bell on May 1, 2013.
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Why a Likely Positive Surprise?
Our proven model shows that Merck has the right combination of
two key ingredients to beat earnings.
Positive Zacks ESP
: The earnings Expected Surprise Prediction (ESP) (Read:
Zacks Earnings ESP: A Better Method
) for Merck is +1.28% - the difference between the Most Accurate
earnings estimate of 79 cents per share and the Zacks Consensus
Estimate of 78 per share. This indicates a likely positive
Zacks Rank #3 (Hold)
: Merck carries a Zacks Rank #3. Note that stocks with Zacks Rank
of #1, #2 and #3 have a significantly higher chance of beating
earnings. The Sell rated stocks (#4 and #5) should never be
considered while going into an earnings announcement.
The combination of its Zacks Rank and Earnings ESP for Merck
makes us confident of a positive earnings surprise in the
Drivers of Better-than-Expected Earnings
While headwinds remain in the form of the Singulair
genericization, EU pricing pressure, unfavorable currency
movement, US health care reform and pipeline setbacks, some of
the company's recent launches should start contributing
significantly to the top line in the first quarter.
Products that should add significantly to revenues include
hepatitis C virus (HCV) drug Victrelis, fertility drug Elonva,
Saphris (acute treatment of schizophrenia and bipolar I disorder
in adults), Simponi (treatment of certain inflammatory diseases),
Dulera (asthma), and Daxas (chronic obstructive pulmonary
disease) among others. Additionally we believe Merck's Januvia
(sitagliptin) for type-II diabetes should continue to benefit
from regulatory restrictions imposed on competitor
This company has delivered positive earnings surprises in the
last four quarters with an average beat of 2.66%. We expect the
trend to continue.
Other Stocks to Consider
Merck is not the only company looking up this earnings season.
Here are some other stocks you may want to consider as our model
shows these have the right combination of elements to post an
earnings beat this season:
) has an earnings ESP of +7.84% and holds a Zacks Rank #3.
) has an earnings ESP of +8.33% and holds a Zacks Rank #3.