Pharma's Market

PHARMA WATCH LIST

SPECIAL REPORT

Healthy Horizons
A brand new series of weekly segments which will explore the macro and micro issues facing the global economy.

LATEST FROM OUR BLOGS

» More

- Facebook: The Song — Yes, We're Serious

TOP HEADLINES

» Markets | Economy | Companies

- 'Flash Sale' Sites: Gimmick, or the Future of Online Shopping?

PHARMA'S MARKET VIDEO

» More

Wall Street Protests 29 Apr 2010
Following a big demonstration in favor of financial regulation right outside the NYSE, with CNBC's Mike Huckman.
March on Wall Street 29 Apr 2010
Main Street takes to Wall Street today with thousands of union community activists marching to make the big banks pay, with CNBC's Mike Huckman.
Mike Huckman: Reporter's Reporter 29 Apr 2010
Original air date, June 26, 2002.
SBUX Beats the Street 21 Apr 2010
CNBC's Mike Huckman has Starbucks' earnings breakdown.

The Orange Squeeze on Dimon

16 Apr 2010

Some students at Syracuse University have a different idea rather than having JPMorgan's chairman/CEO Jamie Dimon deliver this year's commencement speech, reports CNBC's Mike Huckman.

Nasdaq Outperforms 14 Apr 2010
The Nasdaq easily outperforming the other major indexes today, with CNBC's Mike Huckman.

RSS FEED

» Help

Subscribe to this RSS feed
Stay up to date with Pharma's Market.

UBS And Its Guarded Outlook For Merck's Gardasil

Published: Monday, 7 Jul 2008 | 11:14 AM ET

Text Size

By: Mike Huckman
Reporter

CNBC.com
Shares of Merck, which have lost more than a third of their value so far this year, are under continued pressure this morning. They were at 60 bucks in early January.

Today they're trading around $37. Big pharma analyst Rupesh Patel at UBS is downgrading the Dow component from Buy to Neutral because he thinks it's gonna be "range-bound near-term" and he's cutting his price target from $43 to $40.

On the one hand, Patel writes that MRK [MRK Loading... () ]"is among the most innovative and best managed companies in the sector." But on the other hand, he wants to see evidence of long-term revenue growth prospects, does not see near-term earnings upside and believes that sales of the company's cervical cancer vaccine Gardasil could be "roughly flat" between the first quarter and the second quarter. Merck reports earnings on July 21st.

Specifically, Patel is slashing his second-quarter Gardasil sales estimate from $380 million to $300 million. "We're nervous on this front," he wrote in the research note to clients. Merck sold $293 million worth of the the vaccine in the first quarter. Patel's basing his forecast on data from IMS Health [RX Loading... () ]which monitors prescription trends for the industry and Wall Street. Patel points out that MRK has cautioned analysts in the past from relying on IMS' numbers for Gardasil to build their models, but he adds that over the past year the IMS data has been pretty darn close to the actual reported sales number.

On the plus side, though, Patel says his Q2 Gardasil sales projection assumes the product will have had its best sales month ever in June. Maybe that's due to pre-back-to-school buying or stockpiling of the shots. He also notes that Merck's new diabetes drugs Januvia and Janumet remain solid growth drivers and that sales of the embattled cholesterol drugs Vytorin and Zetia, which MRK shares with Schering-Plough[SGP Loading... () ], have stabilized over the past two-and-a-half months. But in addition to Gardasil, Patel--and many other analysts, for that matter--is also concerned about falling prescriptions for MRK's top-selling drug, Singulair, for asthma/allergies in the wake of reports about a potential suicide risk.

Merck recently suffered a regulatory setback when the FDA delayed a decision on whether to approve Gardasil for older women. But it got a competitive boost when GlaxoSmithKline [GSK Loading... () ]announced last month that it's pushing out the timeline for potential approval of its similar vaccine, Cervarix. Merck is also moving ahead with plans to file for the FDA OK to sell Gardasil for young men and boys who can carry the sexually-transmitted virus that's the leading cause of cervical cancer.