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Acquisition Costs Weigh Down Merck’s Profit, but Adjusted Results Beat Expectations (MRK)

Posted: 5/4/2010 9:03:00 AM
Referenced Stocks: MERCK;MRK

Drugmaker Merck & Co., Inc. ( MRK ) on Tuesday said its first quarter profit plunged substantially from last year, weighed down by acquisition costs, but adjusted results easily beat analysts' view as revenue doubled.

The Kenilworth, NJ-based company reported first quarter net income of $298.8 million, or 9 cents per share, compared with $1.43 billion, or 67 cents per share, in the year-ago period. Excluding one-time costs tied its its recent $41 billion acquisition of Schering-Plough Corp., however, adjusted profit was 83 cents per share in the quarter.

Revenue more than doubled from last year to $11.42 billion.

On average, Wall Street analysts expected a smaller adjusted profit of 75 cents per share, on lower revenue of $11.18 billion.

Merck said it's still on track to meet its annual savings goal of $3.85 billion in 2012. Those savings will stem from the Schering-Plough deal.

Looking ahead, the company forecast adjusted full-year 2010 earnings of $3.27 to $3.41 per share, on around $46 billion in revenue. Analysts currently expect $3.41 per share and $45.83 billion in revenue for the year.

Merck shares rose 48 cents, or +1.4%, in premarket trading Tuesday.

The Bottom Line
We have been recommending shares of MRK since Dec.1, when the stock was trading at $36.21. The company has a 4.31% dividend yield, based on last night's closing stock price of $35.27.

Merck & Co., Inc. ( MRK ) is a "recommended" dividend stock, holding a DARS™ Rating of 3.5 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .