For Immediate Release
Chicago, IL – November 1, 2010 – Zacks.com Analyst Blog features: Monster Worldwide, Inc. (MWW), Yahoo! Inc. (YHOO), Merck & Co. (MRK), Johnson & Johnson (JNJ) and VeriSign Inc. (VRSN).
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Here are highlights from Friday’s Analyst Blog:
Monster Beats, Gives Strong Outlook
Monster Worldwide, Inc. (MWW), the parent company of Monster.com, reported revenues of $228.8 million, up 6.7% from the year-ago quarter and up 6.5% sequentially, which beat the Zacks Consensus Estimate of $223 million. The reported figure includes a $1.8 million purchase accounting adjustment related to the HotJobs acquisition.
Monster completed the acquisition of HotJobs from Yahoo! Inc. (YHOO) in August 2010 and the third quarter financial results include approximately five weeks of HotJobs’ results.
Excluding the purchase accounting adjustment, Monster generated revenues of $231 million, of which $7.7 million is attributed to HotJobs, up 7.4% year over year.
Careers revenue came in at $196 million. Excluding HotJobs revenue of $7.7 million, Careers revenue was $188 million, up 4% year over year. North America generated revenues of $101 million, up 6% year over year. Careers-International revenue increased 2% to $87 million. Internet Advertising & Fees revenue of $35 million was flat year over year.
Management saw solid improvement across all key geographic regions and all sales channels. Bookings grew 26% year over year to $235 million. Excluding HotJobs, bookings were $229 million, up 23% year over year. Asia was up 36%, positively impacted by 4% of currency translation. North America was up 31%. Europe increased 17% after observing an 11% negative impact from currency.
The business for the company crashed in the second quarter of 2008 and started stabilizing in the third quarter of 2009, which continued through the middle of 2010.
Merck Beats on EPS, Not Revenues
Merck & Co. ‘s (MRK) earnings per share (EPS) for the third quarter of 2010 came in at 85 cents, a couple of cents above the Zacks Consensus Estimate but below the year-ago earnings of 90 cents. However, including adjustments, the company reported earnings of 11 cents, well below the year-ago earnings of $1.61.
Merck reported revenues of $11.1 billion, just shy of the Zacks Consensus Estimate of $11.2 billion. Revenues in the year-ago period were $6.0 billion. Reported quarter revenues include revenues from Schering-Plough products following Merck’s merger with Schering-Plough on Nov 3, 2009.
Results by Product
Gardasil, Merck’s cervical cancer vaccine, posted sales of $316 million, up 2% year over year. The timing of certain public sector sales helped improve Gardasil’s performance, which had been lagging over the past few quarters.
Zostavax sales, which declined 72.6% to $23 million, continued to be affected by supply constraints. Meanwhile, Merck’s ProQuad, MMR II and Varivax vaccines recorded combined sales of $434 million, down 6%.
Singulair, indicated for the treatment asthma and relief of symptoms of allergic rhinitis, recorded $1.2 billion in sales, up 12% from the year-ago period. Meanwhile, Remicade sales increased 9% to $661 million.
Cardiovascular franchise sales, primarily consisting of Vytorin and Zetia, came in at $1.1 billion, down 3.7%. Isentress, the company’s product for HIV infection, recorded an increase of 41% to $278 million during the reported quarter. Isentress’ label was expanded in both Europe and the US in 2009 to include its use as a combination therapy for previously untreated patients. As a result, we expect the drug to record increased sales in the forthcoming period.
As expected, sales of Merck’s antihypertensive medicines, Cozaar and Hyzaar, continued to decline during the third quarter. Sales came in at $423 million, down 51%. The decline was expected as these drugs lost market exclusivity in the US in April and in major European markets during the first quarter. We expect sales to continue declining going forward.
The diabetes franchise, consisting of Januvia and Janumet, continued to perform well. While Januvia sales grew 22% to $600 million, Janumet recorded sales of $247 million, an increase of 43%. Januvia, which was launched recently in Japan, received an encouraging response from patients and physicians.
Guidance Tightened
Merck tightened its guidance for 2010 by raising the lower end of its previously issued earnings guidance by a couple of cents. The company now expects earnings in the range of $3.31 – $3.39 per share on revenues of $45.4 – $46.1 billion. The company was earlier guiding towards earnings in the range of $3.29 – $3.39 on revenues of $$45.4 – $46.1 billion.
The US healthcare reform is expected to hit Merck’s 2010 revenues by $170 million, including $120 million impact in the first nine months of 2010.
Meanwhile, Merck expects to retain full rights to Remicade and Simponi. Johnson & Johnson (JNJ) had discovered Remicade and Simponi (golimumab) and had licensed ex-US rights to Schering-Plough (now a part of Merck). Simponi is currently available in 18 countries.
Johnson & Johnson believes that Merck’s merger with Schering-Plough has triggered a change-of-control provision in the agreement allowing Johnson & Johnson to reclaim full rights to both drugs. A decision regarding this issue could be out in the first half of 2011.
We also note that Merck is still on target to achieve a high single-digit growth rate in adjusted EPS for the period of 2009-2013. Following the completion of its merger with Schering-Plough in Nov 2009, Merck is confident of achieving its previously announced target of $3.5 billion in annual savings in 2012.
Our Take
We currently have a Neutral recommendation on Merck, which is supported by a Zacks #3 Rank (short-term Hold rating). Merck is currently facing issues such as patent expirations of key drugs and EU pricing pressure.
However, the company has a deep pipeline which should act as a cushion when its key products lose patent expiry in the next few years. Moreover, some of the company’s recent launches should start contributing significantly to the top line in the forthcoming quarters. Besides, the restructuring initiatives undertaken by the company should also improve its bottom line.
VeriSign Demonstrates Growth
Internet infrastructure services provider VeriSign Inc. (VRSN) reported revenues of $173 million from continuing operations for the third quarter of 2010, up 10% year over year and up 2% from the prior quarter. The results were in line with the Zacks Consensus Estimate.
The continuing operations of the company consist primarily of the results of the Naming Services business, which comprises Registry Services and Network Intelligence and Availability (NIA) Services. NIA Services include the Managed Domain Name System (Managed DNS), iDefense and Distributed Denial of Service (DDoS) mitigation businesses.
Naming Services generated revenues of $172 million, up 11% year over year and up 3% sequentially, driven by a rebound in the internet business. VeriSign is yet to wind down the non-core Content Portal Services (CPS) business which contributed $364,000 to the top-line in the third quarter.
The base of registered names for .com and .net totaled 103.5 million active domain names, up from 101.5 million names at the end of June and growing 9% year over year. The company added 7.5 million net new domain names in the quarter, up 7% year over year. VeriSign experienced an average daily query load of 66 billion in the third quarter, up from 63 billion in the previous quarter and 54 billion in the year-ago quarter.
VeriSign ended the quarter with a headcount of approximately 1,100 compared to 2,225 employees at the end of the previous quarter before the close of the sale of Authentication Services.
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