Why This Dow Heavyweight Sank on Earnings

Shares of Dow component Merck (NYSE: MRK  ) slumped 2.6% today after the drugmaker reported its third-quarter results, but not all of the news was bad. Year-over-year non-GAAP earnings per share dropped by a sliver, but the company's bottom line did beat analyst estimates.

The negative market reaction, however, was rooted in the slowing growth of its diabetes franchise. While Januvia continues to be Merck's key blockbuster drug, there are many competing products in the type 2 diabetes space, including products from Bristol-Myers Squibb (NYSE: BMY  ) , AstraZeneca (NYSE: AZN  ) , and Johnson & Johnson. In the following video, from The Motley Fool's health-care show Market Checkup, analysts Max Macaluso and David Williamson discuss the full earnings report and look at both the broader opportunities and risks for this drugmaker. 

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Note: At 0:28, the speaker was referring to a drop in GAAP earnings, which isn't adjusted for one-time charges.


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