Merck gave earnings forecasts for 2007 and 2008 that were mostly below expectations.
The company reaffirmed its outlook for 2007 profit between $3.08 and $3.14 per share. In 2008, the company expects profit between $3.96 and $4.06 per share. Excluding one-time charges and gains, 2008 earnings per share are projected to range between $3.28 and $3.38.
Analysts polled by Thomson Financial have forecast 2007 profit of $3.15 per share and 2008 profit of $3.39 per share. The $3.33 midpoint of Merck's adjusted 2008 earnings range falls below Wall Street's consensus estimate.
Shares of the drug company were flat Tuesday after starting the day down by more than 2 percent.
The company will be under pressure to continue to deliver good results.
"When you look at the fact that Merck is the number one performer in the Dow this year, up 37 percent, hitting new highs in a difficult market climate, clearly they have exceeded expectations," Barbara Ryan, managing director and senior pharmaceutical analyst at Deutsche Bank Securities, told "Squawk Box.".
"I think that certainly the expectations is that would continue, so that's sort of the issue for the fourth quarter," she added.
Analyst Still Sees Positive Long-Term Outlook
In the long term, the company's outlook is positive, the analyst said, as it has a good portfolio of new products.
"Twelve months from now, Merck stock would be reflecting earnings for the 2009 outlook," Ryan said.
"I think that this company is on track to exceed its 10 percent compounded earnings growth until 2010," she added.
Growth in 2008 is expected to be driven by higher sales of the company's human papilloma virus vaccine Gardasil and diabetes drug Januvia, among other products.
"Despite the loss of marketing exclusivity for Fosamax in the United States in February 2008, the company anticipates solid earnings growth in 2008," said Peter N. Kellogg, chief financial officer.