Wednesday, February 2, 2011

"Expense Control"? -- We'll See About That, Tomorrow. . . .

With Merck falling on the NYSE today, it might well be that the irrational euphoria, from Pfizer's Q4 2010 results yeaterday morning (they weren't as bad as many had feared -- but still clearly under pressure, vis-a-vis Wall Street's estimates) are wearing off. To wit: below is some now slightly dated reporting from

Merck is very, very unlikely to post any upside surprise, tomorrow:

. . . .Analysts are looking for Merck to report EPS of $0.87 on $11.5 billion in revenue. Clearly, they have allowed some wiggle room for the company to miss these numbers and still rally the stock, as sentiment is so poor that it can only improve. The story will be expense control, since the Street estimates represent bottom-line growth of 7% year over year but a top-line decline of 6% year over year! U.S. sales will weaken around 10% as Cozaar/Hyzaar went generic, whereas international sales will be more stable. . . .

Stable? Yes, on an in-country basis -- but Merck must report those sales in US dollars, tomorrow. So I predict that currencies will have eaten away at least 4 percent, in my estimation-model, based on the stronger influence of the Euro, post addition of the Schering-Plough exposures, and rather undersized hedging in place, at Merck, at present.

In any event, do stop back around 8 am EST tomorrow.

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