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Will Merck Earnings Move the Dow?

Dan Caplinger
January 30, 2013

With hundreds of companies having reported quarterly results, we're now in the heart of earnings season. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed, knee-jerk decision.

Let's turn to Merck (NYSE: MRK). The pharmaceutical giant defied some pessimistic expectations by posting a 13% gain in 2012, besting the performance of the Dow Jones Industrial Average (INDEX: ^DJI) despite having to deal with the expiration of important patents. Let's take an early look at what's been happening with Merck over the past quarter and what we're likely to see in its quarterly report on Friday.

Stats on Merck

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$11.47 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo Finance.

Will Merck make portfolios healthy?
Analysts are reasonably comfortable with their views on Merck, with their earnings-per-share estimates having fallen by just $0.02 per share in the past three months. But shareholders are less comfortable, as the stock has fallen more than 4% since late October.

Merck has done a good job of weathering the storm following the loss of patent protection for its Singulair asthma drug, which has been responsible for a substantial part of the company's revenue loss over the past year. The drug accounted for 11% of Merck's sales in 2011, but Merck has an impressive pipeline of drugs in advanced trials that are preparing to take Singulair's place in providing revenue for the com