Merck & Co. Inc.
) is scheduled to report its third quarter 2013 results on Oct
28, 2013 before the opening bell.
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We remind investors that Merck has delivered positive earnings
surprises in each of the last four quarters with an average beat
of 4.01%. Last quarter, the company came up with a 2.44% positive
surprise. Let's see how things are shaping up prior to the
Factors at Play
Although Merck's second quarter 2013 earnings beat expectations,
the overall results were disappointing. With Singulair and a few
other products facing generic competition, we expect the top- and
bottom-line to remain under pressure this quarter.
Other headwinds include unfavorable currency movement and
pipeline setbacks. Meanwhile, Merck received a complete response
letter (CRL) from the U.S. Food and Drug Administration (FDA) for
the resubmission of the New Drug Application (NDA) for sugammadex
sodium injection (neuromuscular reversal agent).
These challenges should be partially countered by the company's
cost-cutting initiatives and share buybacks.
Our proven model does not conclusively show that Merck will beat
earnings this quarter as a stock needs to have both a positive
and a Zacks Rank #1, #2 or #3 to be able to beat Zacks Consensus
That is not the case here as you will see below.
The ESP, which represents the difference between the Most
Accurate estimate and the Zacks Consensus Estimate, is 0.00% as
both the Most Accurate Estimate and the Zacks Consensus Estimate
currently stand at 88 cents.
Zacks Rank #4 (Sell):
Merck's Zacks Rank #4 when combined with a 0.00% ESP indicates a
likely earnings miss in the third quarter.
We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some companies you may want to consider as our model
shows that they have the right combination of elements to post an
earnings beat this quarter:
), with Earnings ESP of +0.48% and a Zacks Rank #2 (Buy).
Endo Health Solutions Inc.
), with Earnings ESP of +0.89% and a Zacks Rank #3 (Hold).
), with Earnings ESP of +1.28% and a Zacks Rank #3 (Hold).