Merck & Co. Inc. shares rose 8.3 percent yesterday on surprise word from the company that strong sales had lifted its quarterly profit as much as 25 percent over last year.
Merck's announcement late Thursday night, after markets had closed, was followed yesterday morning by more positive news for the drugmaker: A federal judge in New Jersey threw out a Vioxx-related securities lawsuit by investors.
U.S. District Judge Stanley Chesler in Newark ruled that the consolidated claims were barred under statutes of limitations, according to Merck.
On the New York Stock Exchange, Merck shares closed yesterday at $50.21, a gain of $3.85. It appeared to be Merck's biggest one-day gain since February 2005.
In its announcement Thursday night, Merck said it had seen "strong revenue performance across the company's range of products" in the first quarter.
As a result, it said it anticipated first-quarter earnings - to be announced formally next Thursday - to reach 84 cents a share.
That figure is roughly 25 percent higher than its previous guidance in February of between 63 cents and 67 cents a share. The per-share profit figure excludes restructuring charges.
Including those charges, Merck said per-share earnings would be about 78 cents, up 16 percent.
The company also raised its full-year guidance by 7.5 percent, to a range of $2.75 to $2.85 from the previous range of $2.55 to $2.65.
"Buy," Deutsche Bank pharmaceutical equity analyst Barbara Ryan said yesterday morning in a note to investors.
She attributed the results to drug-price increases, and strong demand for the cervical-cancer vaccine Gardasil and new diabetes treatments Januvia and Janumet.
Merrill Lynch & Co. Inc. analyst David Risinger said in a note yesterday morning that the news was surprising given Merck's guidance just two months ago.
Nonetheless, he also raised his projection and urged investors to buy.
Merck's good news was released only hours after a disappointing decision Thursday by U.S. Food and Drug Administration advisers, who voted against recommending approval of Merck's Vioxx successor Arcoxia.
Most analysts had doubted that the FDA would approve the drug, and predicted insignificant U.S. sales for several years even if it were approved.