Merck & Co's reaffirms cautious 2006 EPS

Merck & Co reaffirmed its full-year 2006 profit forecast, predicting earnings per share of $2.48 to $2.52. The US drug major also stated modest guidance for 2007 with an EPS of $2.51 to $2.59. On the day of the announcement, December 6, shares in the firm fell 1.4% to $44.39 in mid-day trading.

The range for 2007 reflects restructuring charges related to site closures and position eliminations. On a reported basis, the company anticipates EPS next year of between $2.36 and $2.49. Mehta partners analyst Shaojing Tong said that, while Merck did not say anything too suprising, some investors may have been disappointed that it does not match some of the more optimistic estimates.

Disappointed observers might take comfort in the fact that Merck's stated guidance does not reflect its cash reserves for any potential liability relating to the litigation over its withdrawn painkiller Vioxx (rofecoxib) although neither does it include the impact of any potential acquired R&D expense relating to its $1.1 billion purchase of US RNAi specialist Sirna Therapeutics (Marketletter November 6).