Merck beats profit expectations and raises its outlook

Merck & Co. reported a second-quarter net profit that fell to $687 million, or 24 cents a share, from $2 billion, or 68 cents a share, in the same period a year ago. Excluding non-recurring items, such as costs related to acquistions and divestitures, adjusted earnings per share came in at 86 cents, beating the FactSet consensus of 81 cents. Revenue fell 11% to $9.79 billion, just shy of the FactSet consensus of $9.81 billion, with currency movements reducing revenue by 7 percentage points. Pharmaceutical sales fell 6%, but increased 3% excluding the effect of currency translation, helped by strength in Merck's hospital acute care, oncology and diabetes businesses. For the full-year 2015, Merck raised its adjusted EPS outlook to a range of $3.45 to $3.55 from $3.35 to $3.48, according to FactSet. "We're investing resources to grow our strongest brands and to support the most promising assets in our pipeline, while at the same time lowering our cost base and delivering operating leverage," said Chief Executive Kenneth Frazier. The stock, which was indicated up nearly 3% in premarket trade, has lost 5% over the past three months while the Dow Jones Industrial Average has slipped 3.7%.

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