Merck falls on 4Q loss, sales questions

Merck & Co. shares fell Wednesday after the company said it swung to a loss in the fourth quarter, and investors wondered how strong future sales of Merck's cholesterol drugs will be.

The company reported its fourth-quarter results Wednesday, posting a larger-than-expected profit when one-time charges were excluded. Revenue came up slightly short of analyst estimates.

Including one-time expenses, primarily a large charge related to a settlement of lawsuits surrounding Merck's withdrawn painkiller Vioxx, the company lost $1.63 billion, or 75 cents per share.

The company reiterated its 2008 profit forecast of $3.28 to $3.38 per share, excluding one-time charges. However, analysts said questions remain about sales of Zetia and Vytorin, which brought Merck $538 million in revenue in the fourth quarter.

A recent study showed that Vytorin was no more effective than a generic drug at stopping plaque from accumulating in arteries, leading to government scrutiny and lawsuits against Merck and its partner on the drugs, Schering-Plough Corp.

On average, analysts polled by Thomson Financial estimate a profit of $3.36 per share for Merck.

Goldman Sachs analyst James Kelly, who rates the stock "Neutral," said Merck has not addressed the impact those developments might have on sales.

"Initial enthusiasm for the maintained guidance will likely wane as the recent analyst earnings per share reductions for the cholesterol joint venture are not reflected/addressed," he said.

Citing the same questions, Deutsche Bank analyst Barbara Ryan cut her price target to $62 per share from $70, and maintained a "Buy" rating.

Shares fell $1.32, or 2.8 percent, to $46.69 Wednesday.

Source : http://www.businessweek.com