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Contributors: Douglas McIntyre Jon C. Ogg

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Monday, July 24, 2006

Merck on Post-Vioxx Highs

Stock Tickers: MRK, SGP, PFE, NVS

After reviewing earnings on most actives on various stocks it was hard not to notice that Merck (MRK) wasn't just on 52-week highs, it was on its highest level since the post-Vioxx scandal and share fiasco. MRK is up 3.3% at $38.53.

Merck still has well over 10,000 Vioxx cases outstanding, but this is becoming a more quantifiable event. Based on the case rulings, it does not appear as though juries across the US are going to award damages to everyone who had a heart attack while taking Vioxx. Predicting jury outcomes can be a tricky operation and it is obvious that the company will not get off the hook without having to fork out vast sums of money.

The company's $0.73 EPS before restructuring costs trumped the $0.65 consensus estimate and the company's guidance puts it at the higher-end of estimates for the year. It appears that the company's efforts of pricing its name brand drugs coming off patent under or close to generics is panning out well.

Schering Plough (SGP) is also up over 4% after they beat earnings estimates as well, and this is having a positive impact on the drug sector. Pfizer (PFE) is up over 2% at $24.36. Even ADR's of Novartis (NVS) are trading up after reports in medical journals show an increased chance of cardiac events.

Jon C. Ogg
July 24, 2006
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