Merck's Profit Up

Elena
24 Oct, 2005
New York City

Asian-Pacific markets finished down ahead of earnings reports with the Nikkei losing 0.7%. European stocks gained ground at mid-day, led by the German DAX 30, up 0.2%. Earnings news dominate again. Drug maker Merck posted higher third-quarter profit, despite 2% sales drop, beating estimates. Another drug manufacturer Shering-Plough reported higher Q3 earnings on 15% top line growth.

U.S. MARKET AVERAGES

U.S. stock markets opened higher on better-than-expected earnings news and lower crude oil. Of all the 200 companies, which have posted quarterly results so far, 72% beat Wall Street estimates compared with last year’s 58%. The results show solid economic growth and raise investors’ optimism.

The Dow Jones industrial average was up 17.61 points, or 0.17%. The Standard & Poor's 500 Index was up 1.57 points, or 0.13%. The Nasdaq Composite Indexwas up 7.30 points, or 0.35%.

The pharmaceutical sector is in the focus as Merck & Co. ((MRK)) reported third-quarter earnings rise of 65 cents a share, up vs. 60 cents a year ago, exceeding estimates of 62 cents per share. The company reported quarterly sales decline of $5.4 billion. Another drug maker Schering-Plough Corp ((SGP)) announced disappointing third-quarter results of 3 cents a share.

The world's largest radio operator, Clear Channel Communications Inc. ((CCU)) and chip maker Texas Instruments ((TXU)) are expected to report quarterly results after the closing bell.

MOVERS AND SHAKERS

Taser International ((TASR)) was upgraded by Jefferies & Co. to “buy”. The financial broker pointed opportunities to expand revenue and market share. Stun gun manufacturer’s stock jumped 14.5%.

Cendant ((CD)) announced that it will split itself into four companies by 2006. The name of the controversial conglomerate will vanish. The company will set up the new companies out of its four main lines of business: real estate, travel, hotels and car rentals. Cendant’s stock was up 8.7%.

Schering-Plough ((SGP)) said its third-quarter earnings increased, as compared to the profit a year ago, due to contributions from its turnaround program and strong sales of anti-cholesterol agents. The company’s stock gained 4.2%.

Merck ((MRK)) reported third-quarter earnings of $1.42 billion, or 65 cents a share, up from $1.33 billion, or 60 cents a share, a year ago. The company’s sales declined 2%. Merck’s stock fell on Friday.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks closed the session mostly in the red ahead of major companies’ earnings releases. The Nikkei declined 0.7%, awaiting quarterly reports from Sony and other giants. It was also pressured by tech companies like NEC Corp. and Pioneer Corp. Across the region, Hong Kong’s Hang Seng lost 0.7%, Taipei’s Weighted index fell 0.4%, while South Korea’s Kospi edged up 0.1%, supported by steelmaker Posco.

European markets gained ground at mid-day dealings, lifted by steady oil prices below $60 a barrel and upbeat earnings report from German drug maker Shering. Oil-sensitive chemicals sector and resource stocks were among the best performers in early trading. The German DAX 30 gained 0.2%, the French CAC 40 added 0.2%, and London’s FTSE 100 edged up 0.1%.

ENERGY, METALS, CURRENCIES

Crude oil slipped below $60 a barrel after Hurricane Wilma struck Florida, avoiding the oil producing and refining facilities in the Gulf of Mexico. Light sweet crude December contract dropped 92 cents to $59.71 a barrel in electronic trading on the Nymex. Gasoline lost 4 cents to $1.6000 a gallon, while heating oil lost 3 cents to $1.8340. Natural gas slipped 24 cents to $12.630 per 1,000 cubic feet.

In European trading gold traded mixed. In London gold traded at $463.75 per troy ounce, down from $464.80, while in Zurich it climbed to $463.85 from $461.25. In Hong Kong the precious metal rose $1 to close at $463.75. Silver traded at $7.67, up from $7.58.

In European trading the U.S. dollar declined against other major currencies. The euro was quoted at $1.1947, up from $1.1934. The dollar changed hands at 115.61 yen, down from 115.92. The British pound was trading at $1.7676, up from $1.7645.

EARNINGS NEWS

Merck & Co. ((MRK)), drug producer, posted Q3 earnings of 65 cents a share, up from 60 cents a share a year-ago, beating analyst estimate of 62 cents a share. Sales shed 2% in Q3. The Dow component estimates its withdrawal of the drug Vioxx from the market lowered sales by 3% in Q3. Merck also announced that it hasn't established any reserves for potential liability related to the Vioxx lawsuits and investigations, and that unfavorable outcomes in these cases could have a material adverse impact of its financial position, liquidity and operating results.

Archstone-Smith ((ASN)), real-estate investment trust, reported Q3 net earnings of 80 cents a share, up from 70 cents in the same period last year on revenue growth, beating analyst estimate of 43 cents a share. Excluding gross gains from asset sales, the company’s funds totaled 65 cents a share, up vs. 56 cents in the year-ago period. The company lifted its 2005 financial targets and now envisages earnings in the range of $2.50 to $3.00 a share while FFO is now pegged at $2.10 to $2.13 a share.

Barnes Group Inc. ((B)), industrial supplies manufacturer, reported that Q3 net income rose 81 % to 70cents per share, up vs. 40 cents per share in the same period last year. Q3 net sales came in at $271.5 million, up 11 % from $243.9 million in the year-earlier period. Excluding retroactive tax benefits and a positive out-of-period adjustment related to accounts payable, net income would have been 55 cents per share, a 42 % rise from.40 cents per share in the comparable period last year.

Ethan Allen Interiors Inc. ((ETH)), manufacturer of home furnishings and accessories, reported Q1 earnings per share, including pre-tax restructuring and impairment charge, came in at.49 cents, down from 51 cents per share in the comparable period last year. Apart from the impact of the restructuring and impairment charge, Q1 earnings per share were 57cents per share. Operating income, also including the aforementioned restructuring and impairment charge, declined 8.9%. Excluding the restructuring and impairment charge, operating income advanced 4.8% of net sales.

Bank of Hawaii ((BOH)), financial services company, posted Q3 earnings of 85 cents a share, up versus 78 cents a share in the year-ago period, beating analysts’ forecasts of 83 cents a share. Net interest income advanced to $102 million from last year's $98.8 million and non-interest income rose to $55.5 million from $53.1 million. Return on average assets dropped to 1.74% from 1.77%, while return on average equity rose to 24.61% from 23.42%.

Johnson Controls Inc. ((JCI)), automotive group designer, reported that Q4 net profit advanced 4% to $1.45 a share on 7.2% revenue growth, helped by 37% growth in power solutions division sales. Apart from a 5 cent per share hit from tax adjustments, the company would have gained $1.50 a share, beating analyst forecasts by a penny. For fiscal 2006, it envisages sales advancing approximately 15% to $32 billion with earnings from continuing operations ranging from $5 to $5.15 a share.

Veeco Instruments, Inc. ((VECO)), semiconductor equipment maker, reported a Q3 net profit of 5 cents a share, up from a loss of 7 cents a share in the same time last year. Apart from one-time items, the company would have gained 14 cents a share, beating analysts’ forecast for earnings of 12 cents a share. Sales for the period advanced 4% to $100.1 million. Bookings for the period increased 6% to $84.6 million, lower than Veeco's guidance of between $95 million and $100 million.

Carpenter Technology Corp. ((CRS)), specialty alloy company, posted Q1 earnings of $1.54 a share, up from 80 cents a share in the year-ago period, beating analysts’ forecasts of $1.26 a share. Sales jumped to $346 million for Q1 from $297.6 million in the same time a year earlier. The company envisages free cash flow of more than $125 million for fiscal 2006.