The pharmaceutical industry is one of those that seem a safe bet even during a turbulent economy. After all, people will always get sick, so the stock of companies like Merck & Co. (MRK) should always be in demand.
During the company’s recent second quarter reporting in late July, Merck announced that its fiscal 2011 revenue guidance was in line with its estimates and raised its low-end range on guidance for earnings per share to match estimates from analysts.
If investors are looking for cash now, then MRK is probably a good bet. In mid-September, shareholders were paid a dividend of 38 cents per share, recently coming to a 4.79 percent yield.
Analysts and the company both expect earnings per share of $3.74 on revenues of $47.1 billion for fiscal 2011. Merck is running a tight ship, with plans to cut up to 13,000 jobs by late 2015 in its attempt to shore up $1.5 billion in expenses.
The company is not only tightening its belt but also is working to solidify its position in emerging markets. In China, the company is actively engaging in doctor education in an attempt to boost its drug sales rather than expanding its sales force.
In sub-Saharan Africa, Merck has teamed with the Susan G. Komen for the Cure foundation to help address both cervical and breast cancer by supporting disease education, screening, and treatment efforts as well as increased access to cervical cancer vaccinations via a three year, $3 million donation to the Pink Ribbon-Red Ribbon initiative.
Merck reports its third quarter earnings in late October. In its report in early September where it held to its buy rating for MRK, analysts at Bank of America Merrill Lynch said, "Merck offers a good mix of low valuation, track record of returning cash to shareholders, and pipeline optionality, in our view. We also like that MRK's Pharma revenue base is fairly diverse and is supplemented by animal health and consumer businesses, which we see as 'sticky' cash flow streams with growth potential."
The company next reports on or about Oct. 28.
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