What's In Store For Merck KGaA (MKGAF) In Q1 Earnings?

Merck (NYSE:MRK) KGaA MKGAF is scheduled to report first-quarter 2017 earnings results on May 18.

Merck KGaA’s share price has increased 15.5% year to date, while the Zacks classified Medical-Drugs industry gained 6.5%.

The company reports results under three business sectors – Healthcare, Life Science and Performance Materials.

Strong performance at Life Science, which was the catalyst behind sales growth in the last few quarters, is anticipated to continue in the to-be-reported quarter. In addition, Merck KGaA’s 2015 acquisition of Sigma-Aldrich was integrated into the Life Science business. The company expects total synergies from the acquisition to amount to € 280 million by end of 2018 instead of the originally planned € 260 million per year.

Merck KGaA in Apr 2017 announced an agreement to divest its biosimilars business, which was a part of its Healthcare business sector, to Fresenius. The decision to divest biosimilars is aligned with Merck’s strategy for its Healthcare business sector to focus on its pipeline of innovative medicines.

The closing is expected in the second half of 2017, subject to regulatory approvals and other customary closing conditions. For the Healthcare sector, the company is counting on its pharmaceutical pipeline and aims to gain approval for one medicine or new indication every year, 2017 onwards.

Additionally, the company announced a dividend increase of € 0.15 or 14% to € 1.20 per share in Apr 2017. The company made this announcement due to higher earnings or following the Sigma acquisition. In fact, the increased dividend represents Merck’s strong commitment to deleverage.

Meanwhile, we expect management to shed light on Merck KGaA’s pipeline at the conference call.

Currently, Merck KGaA, in collaboration with Pfizer Inc. (NYSE:PFE) , is evaluating Bavencio (avelumab) in several phase III studies for indications such as gastric cancer, platinum-resistant/refractory ovarian cancer, bladder cancer and advanced renal cell carcinoma. Notably, in May 2017, the FDA approved Bavencio) Injection for advanced or metastatic urothelial carcinoma (UC) In Apr 2017, the FDA also approved Bavencio for intravenous use, for metastatic Merkel cell carcinoma (mMCC).

Upcoming Peer Releases

Here are a couple of health care stocks that you may want to consider, as our model shows that they have the right combination of elements – a positive Zacks Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) – to post an earnings beat this quarter. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Editas Medicine, Inc. (NASDAQ:EDIT) has an Earnings ESP of +32.26% and a Zacks Rank #3. The company is expected to release results on May 15. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

AstraZeneca PLC (NYSE:AZN) has an Earnings ESP of +4.55% and a Zacks Rank #3. The company is expected to release results on July 27.

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