 |
|
| Author |
Merck (MRK) Replies |
HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11740
Location: Los Angeles, California
|
 Posted: Thu Feb 02, 2012 2:21 pm Post subject: |
 |
|
Morningstar on MRK's 4Q earnings and its current pipeline.
| Quote: | Merck MRK reported fourth-quarter results that largely matched our expectations, and we don't expect any changes to our fair value estimate. Total sales increased 2% from the prior-year period with strength across the majority of Merck's key products, excluding weakness from cardiovascular drug Vytorin and lower sales from immunology drug Remicade because of partial drug rights returned to Johnson & Johnson JNJ. Earnings per share increased 10% year over year as lower research and development costs helped fuel growth. Merck issued 2012 EPS guidance of $3.75-$3.85, which we believe it will meet, but likely on the low end of the range.
The majority of Merck's products posted steady gains in the quarter, which helped to offset declines in Remicade and Vytorin. This trend should continue through the first half of the year, but the August U.S. patent loss on respiratory drug Singulair will create a major headwind as the drug represents more than 10% of the company's total sales. Rapidly growing drugs such as diabetes medicines Januvia and Janumet along with HIV drug Isentress should help mitigate the loss of Singulair, but we expect a single-digit negative growth rate in 2012. Over the longer term, we expect Merck to return to growth as patent losses are less significant after 2012 and the company is poised to launch several new pipeline products. We believe the most underappreciated pipeline products include sugammadex for anesthesia and an mTor inhibitor for cancer. Additionally, while off to a relatively slow start, recently launched hepatitis C drug Victrelis generated $87 million in the quarter. Based on solid efficacy and a likely willingness to price competitively in cost-sensitive markets, we expect the drug will develop into a blockbuster. Lower research and development expenses offset increased marketing and administrate costs, lifting EPS growth faster than sales growth. As percentage of total sales, operating costs fell about 100 basis points year over year. We expect operating efficiencies will improve through 2012, but the loss of high-margin Singulair this year is likely to cause overall operating margins to decline for the full year. |
|
|
| Back to top |
|
 |
HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11740
Location: Los Angeles, California
|
| Posted: Fri Oct 28, 2011 10:59 pm Post subject: |
|
|
Morningstar on MRK's 3Q earnings:
| Quote: | | Merck MRK reported strong third-quarter results that slightly exceeded our expectations. However, we don't expect a change to our fair value estimate based on the minor outperformance. Total sales increased 3% operationally versus the prior-year period with broad strength across the majority of Merck key products, with the exception of declines from immunology drug Remicade due to partial rights returned to Johnson & Johnson JNJ. Earnings per share increased 11% year over year as lower research and development costs helped fuel growth. Merck raised the lower end of its full-year guidance range by 1%, resulting in a new range of $3.72-$3.76, which we expect the company will easily meet. Steady gains across the majority of Merck's products supported overall growth i n the quarter, offsetting declines in Remicade. While we expect this trend to continue through the first half of next year, the August 2012 U.S. patent loss on respiratory drug Singulair will create a significant headwind for the company as the drug represents more than 10% of the company's total sales. While rapidly growing drugs such as diabetes medicines Januvia and Janumet along with HIV drug Isentress will help mitigate the loss of Singulair, we view single-digit negative growth in 2012 as very likely. Beyond 2012, we expect Merck to return to growth as its patent exposure decreases significantly and several new pipeline products should launch. We believe the most underappreciated pipeline products include sugammadex for anesthesia and an mTor inhibitor for cancer. Further, while it's off to a slow start, we expect hepatitis C drug Victrelis will eventually develop into a blockbuster based on strong efficacy, powerful marketing support, and a likely willingness to price competitively in cost-sensitive areas of the market. Lower research and development expenses offset an increased tax rate, boosting EPS growth faster than sales growth. As percentage of total sales, operating costs fell 200 basis points year over year as the company increased productivity in research and development, partly related to cost synergies from the Schering-Plough acquisition. We expect these efficiencies will continue into 2012, but the loss of high-margin Singulair in 2012 is likely to cause overall operating margins to fall more than 100 basis points next year. |
|
|
| Back to top |
|
|
HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11740
Location: Los Angeles, California
|
| Posted: Fri Jul 29, 2011 11:13 pm Post subject: |
|
|
Morningstar on MRK's 2Q earnings:
| Quote: | | Merck MRK reported in-line second-quarter results, and we don't anticipate any significant changes to our fair value estimate. Excluding the impact of foreign exchange rates, total sales increased 3% year over year, with new product launches helping to offset generic competition. Earnings per share increased 11% from the prior-year period largely based on lower research and development expenses. Partly because of lower expectations for R&D expenses, Merck slightly increased the lower end of its 2011 earnings per share guidance to $3.68-$3.76, which we expect it to meet. Several recently launched drugs are helping to offset generic competition to cardiovascular drugs Cozaar and Hyzaar and oncology treatment Temodar. In particular, respiratory drug Dulera and immuno logy drug Simponi posted strong gains in the quarter. We expect new drug growth will accelerate in the remainder of 2011 and outpace generic competition on older drugs. However, we expect the 2012 patent loss on respiratory drug Singulair will probably cause total sales to fall in 2012. Beyond 2012, Merck is positioning itself for long-term growth with several key products emerging from its pipeline. We project blockbuster potential for the company's recently launched hepatitis C drug Victrelis. Given Merck's strong entrenchment in the hepatitis C market with older drugs and its marketing partnership with Roche RHHBY, we expect Victrelis to compete well with Vertex's VRTX recently approved hepatitis C drug Incivek, despite Incivek's strong clinical profile. We also expect blockbuster potential for anesthesia drug sugammadex , cardiovascular drug Tredaptive, Simponi, and Dulera. Merck is making progress on reducing its cost structure. It announced additional long-term cost cuts to achieve $1.3 billion-$1.5 billion in annual savings by 2015, which is incremental to the already announced cost savings from the Schering-Plough acquisition. While we believe these actions will increase profitability over the long run, we were a little surprised to see marketing and administrative costs increase as a percentage of total sales year over year. The impact of U.S. health-care reform is boosting these costs, but we expect them to fall over the long term, given Merck's aggressive cost-cutting initiatives. |
|
|
| Back to top |
|
|
HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11740
Location: Los Angeles, California
|
| Posted: Thu May 05, 2011 1:35 am Post subject: |
|
|
Morningstar on MRK's 1Q results:
| Quote: | | Merck MRK reported strong first-quarter results that slightly beat our expectations. However, we don't expect to change our fair value estimate based on the minor outperformance. Total sales increased 1% year over year as new product gains offset generic competition to cardiovascular drugs Cozaar/Hyzaar. Earnings per share increased 11% from the prior-year period as significant cost-cutting is improving margins. The company raised the bottom end of its full-year EPS guidance by $0.02, to $3.66-$3.76, which we expect it will meet. On the top line, strong new product growth from diabetes drugs Janumet and Januvia and HIV drug Isentress along with surprisingly robust growth from the more mature respiratory drug Singulair offset the generic competition to Cozaar/Hyzaa r. We estimate generic competition to Cozaar/Hyzaar caused 300 basis points of lost sales growth for the company. In the next quarter, Merck annualizes the generic Cozaar/Hyzaar launch so growth should improve. However, the lost sales of immunology drugs Remicade and Simponi in selected territories as agreed upon by Merck and partner Johnson & Johnson JNJ will weigh on Merck's growth in the second half of the year. Over the longer term, Merck is improving its growth outlook as it faces only one major patent loss in the next five years with Singulair in 2012 and it is poised to launch several key new drugs. Despite the TRA (cardiovascular disease) setback in early January, Merck is poised to launch two important drugs in 2011: boceprevir for hepatitis C (80% chance of approval) and Saflutan in ophthalmology (65% chance of approval). Further, the company's deep Phase III pipeline provides strong reple nishments to the current product line up in 2012-13. Surprisingly, Merck canceled development of its late-stage Factor X inhibitor Betrixaban, which reduces expected competition for J&J's and Bayer's BAYRY Xarelto as well as Bristol-Myers' BMY and Pfizer's PFE apixaban. Merck is making excellent strides in cutting costs, which increases our confidence that it will reach its goal of $3.5 billion in annual cost savings by 2011 stemming from the Schering acquisition. As a percentage of total sales, operating costs fell more than 400 basis points from the prior-year period. Further, the improved margins come despite increased costs due to U.S. health-care reform. We expect Merck will be able to maintain the strong operational gains. |
|
|
| Back to top |
|
|
HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11740
Location: Los Angeles, California
|
| Posted: Fri Feb 04, 2011 4:16 am Post subject: |
|
|
Morningstar on MRK's 4Q results:
| Quote: | | Merck MRK reported fourth-quarter results that slightly exceeded our projections. However, we don't expect any major changes to our fair value estimate based on the minor outperformance. Offsetting the strong quarter, Merck withdrew its long-term guidance of high-single-digit growth from 2009 to 2013 because of pricing pressures in Europe, costs related to U.S. health-care reform, and the pipeline setback with cardiovascular drug TRA. Since we already had been projecting the company would increase the bottom line 4% annually from 2009 to 2013, the lowered guidance matches with our projections. However, Merck's large charge of $1.7 billion related to writing off part of the pipeline drug TRA signals that the drug will probably target a much smaller patient populati on if the remaining trials are successful. While we had cut our projections for TRA following the negative trial update earlier in the year, we plan on reducing our TRA sales projections further, which may have a minor impact on our fair value estimate. Fourth-quarter sales posted a surprisingly strong 1% operational decline year over year despite the company's second-top-selling drug Cozaar/Hyzaar facing fierce generic competition. Steady growth from the company's leading drugs Singulair for respiratory disease and Remicade for autoimmune disorders helped stabilize growth in the quarter. We expect continued steady growth from these drugs through 2011. Additionally, newer drugs including Januvia for diabetes and Isentress for HIV posted better-than-expected results, and we plan on increasing our projections for these drugs. Merck continues to make significant progress in realizing its $3.5 billion in cost savings from the Schering-Plough acquisition. As a percentage of sales , marketing and administrative costs fell more than 300 basis points from the prior-year period. We expect continued cuts in selling and administrative expenses, which should help mitigate the gross margin pressure from the 2012 patent loss on the high-margin drug Singulair. |
|
|
| Back to top |
|
|
HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11740
Location: Los Angeles, California
|
| Posted: Fri Oct 29, 2010 11:13 am Post subject: |
|
|
Morningstar on MRK's 3Q earnings:
| Quote: | | Merck MRK reported third-quarter results that largely matched our expectations, and we don't expect any changes to our fair value estimate. Total sales increased more than 80% from the prior-year period with the Schering-Plough acquisition accounting for the majority of the gains. Excluding the impact of the Schering acquisition, total sales fell 4% year over year as generic competition to cardiovascular drugs Cozaar and Hyzaar weighed on total growth. Earnings per share fell 6% from the prior-year period. The EPS growth exceeded our expectations based on lower-than-expected research and development spending and a large payment from AstraZeneca AZN related to a joint venture. Merck slight ly raised the lower end of its full-year 2010 EPS guidance to $3.31-$3.39, which we expect it will hit on the high end. Merck announced a one-time charge of $950 million related to legal expenses involving Vioxx. While we had projected further legal expenses related to Vioxx, the charge is slightly higher than we had anticipated. However, we don't expect the charge will affect our fair value estimate. As expected, generic competition to Cozaar and Hyzaar weighed on total growth. We expect a continued drag on top-line growth until mid-2011, when the company annualizes the initial generic launch in 2010. With respiratory drug Singulair representing the last major patent loss over the next five years, Merck is successfully navigating major generic competition by bringing new products to the market. The successful recent launches of diabetes drug Januvia and HIV treatment Isentress are mitigating the impact of generic erosion from Cozaar and Hyzaar. We expect this trend to conti nue into 2011. Further, we believe several potential compounds will probably mitigate the loss of Singulair in 2013. We are most bullish about Phase III drug TRA for cardiovascular disease, which should report key data in 2011. We project the drug can develop into a major blockbuster. |
|
|
| Back to top |
|
|
HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11740
Location: Los Angeles, California
|
| Posted: Fri Jul 30, 2010 12:15 pm Post subject: |
|
|
Morningstar on MRK's 2Q earnings:
| Quote: | | Merck MRK reported second-quarter results that largely matched our expectations, and we don't anticipate any changes to our fair value estimate. Earnings per share grew 4% year over year, supported by a low tax rate and improving gross margins. Merck tightened its full-year 2010 earnings outlook to $3.29-$3.39, which we expect it to easily meet. Also, the company maintained its long-term forecast of high-single-digit earnings per share growth through 2013, which we believe may be a bit optimistic. We project a mid-single-digit growth rate for earnings per share through 2013 as a result of increasing generic pressure partially offset by new products. Total sales grew significantly with the inclusion of Schering-Plough. On a product-specific basis, results were mixed. While the company's top drugs, Singulair for respiratory disease and Zetia/Vytorin for cardiovascular disease, posted flat year-over-year growth, the majority of the remaining key drugs, including Remicade for immunology, Januvia for diabetes, and Isentress for HIV, all posted strong gains. We expect to see these drug trends continue over the next several quarters. Additionally, recent generic competition to cardiovascular drugs Cozaar/Hyzaar knocked almost 4% off the top line. While year-over-year comparisons are difficult on the expense side because of the Schering acquisition, sequentially Merck appears to be integrating the acquisition well. Even though the expense lines haven't really begun to realize the targeted $3.5 billion in cost savings by 2012, some improvements are occurring. The gross margin improved more than 100 basis points from the first quarter of the year. However, we believe product mix and not efficiency played the major role in the margin improvement. We expect to see margin improvement as Merck streamlines its operations and wrings cost savings from the Schering deal. |
|
|
| Back to top |
|
|
HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11740
Location: Los Angeles, California
|
| Posted: Sun Mar 05, 2006 9:52 am Post subject: |
|
|
Thanks for the charts, Guzmanero!
From a valuation standpoint, I like the Big Pharmas here - in fact, I had commented that they were definitely buys sometime late last year. I remember MRK at $31.xx - and after my "recommendation," it proceeded to hit $29 or so.
We are also at the right point of the cycle here for healthcare-related stocks.
At the end of the day, one just needs to have a leap of faith and buy the brand name stocks that are in trouble, such as MRK. Just playing the probabilities here.
Not sure about CSCO though. The charts looks good but CSCO is more of a cyclical/capital spending play than anything else. We will see!  |
|
| Back to top |
|
|
Please log in to view without the ad banners |
|
|
|
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum
|
|
FAQ
Search
Memberlist
Usergroups
Statistics
Register
Profile
Log in to check your private messages
Log in
