mrk

Pfizer (NYSE: PFE), a pharmaceutical entity whose colleagues include Merck (NYSE: MRK), Novartis (NYSE: NVS), and Johnson & Johnson (NYSE: JNJ), will be reporting first-quarter earnings Tuesday. As one has come to expect, the market believes that the company will be experiencing a decline in bottom-line income. The call is for 49 cents per share versus 61 cents per share in the year-ago period.

That's a drop of 20%. That might not sound so hot, but the good news is that Pfizer has a solid recent track record when it comes to beating earnings expectations. So shareholders might be justified in feeling confident about that aspect of the game.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Amazon.com Inc. (NASDAQ: AMZN) reported strong Q1 results easily beat expectations.
• Bank of America Corp. (NYSE: BAC) posted better-than-expected Q1 earnings, helped by home refinancing.
• Caterpillar Inc. (NYSE: CAT) reported its first quarterly loss since 1992 and cut its revenue outlook.
• Coca-Cola Co. (NYSE: KO) posted Q1 earnings that were in line with expectations, but shares fell.
• eBay Inc. (NASDAQ: EBAY) posted better-than-expected Q1 earnings despite a decline in sales.

Despite the notion that lawmakers are considering executive compensation pay caps for those companies which may invest in the $1 trillion PPIP, the markets did not turn against Pennsylvania Ave. There were not really any major economic data and shares bounced off lows after traders determined that the bar was being set very low.

Here are today's closing bell levels (unofficial close):

Dow 7,969.56 +127.83 (1.63%)
S&P 500 850.08 +17.69 (2.13%)
Nasdaq 1,643.85 +35.64 (2.22%)

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This morning, Merck (NYSE: MRK) unveiled first-quarter earnings, which dropped 57% thanks to a drop in both drug sales and income from its cholesterol medicine partnerships. Excluding charges, Merck brought in 74 cents per share in quarterly earnings. The results were a full three cents short of the consensus estimate.

Turning to revenue, Merck reported $5.39 billion - an 8% drop from a year ago. The consensus estimate for quarterly revenue was $5.77 billion, so the results were far short of the bar set by the Street.

U.S. stock futures fell Tuesday morning following Monday's sharp sell-off. Investors are reacting to Monday evening's earnings and bracing for another wave of corporate earnings today, including five Dow Jones Industrial Average stocks. Monday's sell-off highlighted Wall Street's worries over earnings generally and the financial sector in particular.

Five Dow components are set to report earnings before the bell: Caterpillar (NYSE: CAT), Coca-Cola (NYSE: KO), DuPont (NYSE: DD), Merck (NYSE: MRK) and United Technologies (NYSE: UTX).

When a $7 a share biotechnology company like Dendreon Corp. (NASDAQ: DNDN) rockets 200% to over $20 a share in one day, like it did yesterday after reporting successful Phase 3 trials of its prostate cancer drug, investors get interested in any biotech stock under $10.

But before investing in these speculative companies, you should have a clear understanding of how this niche operates. Marketing plays an important role in order for the companies to raise capital, therefore if you are interested in betting on a company's future, you should consider the risk factors and odds of success.

Wyeth (NYSE: WYE) closed at $43.11. Pfizer (NYSE: PFE) announced on January 26 the acquisition of WYE for $33 in cash and 0.985 of a share of PFE. PFE closed at $14.04. WYE April and May option implied volatility of 23 is near its 13-week average of 23, according to Track Data, suggesting non-directional price movement.

Schering-Plough (NYSE: SGP) and Merck (NYSE: MRK) approved a definite merger agreement on March 9. SGP shareholders will receive 0.5767 shares and $10.50 in cash for each share of SGP. SGP closed at $24.19. MRK closed at $27.16. SGP April and May option implied volatility of 37 is near its 2-week average according to Track Data, suggesting non-directorial price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

More and more, there are signs that the capital markets are finding equilibrium. For example, Pfizer Inc. (NYSE: PFE) was able to raise $13.5 billion in debt financing this week. The structure was a five-part issue of notes.

Of course, Pfizer needs the cash to pull off its $64.2 billion acquisition of Wyeth (NYSE: WYE).

Analyst upgrades:

• Bernstein upgraded Merck (NYSE: MRK) to Outperform from Market Perform and raised its target to $30 from $27 citing valuation and its decision to buy Schering-Plough, at what appears to be a reasonable price.
  
• RBC Capital upgraded Palm (NASDAQ: PALM) to Outperform from Sector Perform and raised its target to $12 from $5 as it believes webOS has increased its chances for Smartphone leadership and will increase its attractiveness as an acquisition target.
  
• RW Baird upgraded Alcatel-Lucent (NYSE: ALU) to Outperform from Neutral on valuation as it believes balance sheet risks are overly discounted in the stock, creating a buying opportunity. The firm has a $3 target on shares.
• Express Scripts (NASDAQ: ESRX) was raised to Buy from Hold at Argus.
  
• France Telecom (NYSE: FTE) was upgraded at Morgan Stanley to Equal Weight from Underweight.
  
• Foster Wheeler (NASDAQ: FWLT) was upgraded to Conviction Buy from Neutral at Goldman.

This post was written by Minyanville Contributor Steve Smith.

Pharmaceuticals have been alive and merging. The most recent deal is this morning's news that Gilead (NASDAQ:GILD) wants CV Therapeutics (NASDAQ:CVTX), which comes on the heals Roche's purchase of Genentech(NYSE:DNA) and Merck's (NYSE:MRK) proposed merger with Schering Plough(NYSE:SGP).

Merck (NYSE: MRK) and Schering-Plough (NYSE: SGP) approved a definite merger agreement; SGP shareholders will receive 0.5767 shares and $10.50 in cash for each share of SGP. MRK is recently trading at $21.90 in pre-open trading, below its close at $22.74. MRK April option implied volatility of 55 is above its 26-week average of 50, according to Track Data, suggesting larger price movement.

SGP is recently trading at $20.70 in pre-open trading, above its close of $17.63. SGP March option implied volatility is at 88; April is at 69; above its 26-week average of 55, according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

What's one mega-deal when the world's economy is about to shrink for the first time since World War II? Indeed, U.S. stock futures declined significantly Monday morning, indicating markets could sell off again at the start of trading today. Even the $41.1 billion merger between Merck (NYSE: MRK) and Schering-Plough (NYSE: SGP) didn't seem to do much as the global economic crisis cast a shadow over pretty much any good news.

The World Bank came out with a pessimistic outlook, saying the global economy is likely to shrink for the first time since World War II, and trade will decline by the most in 80 years. While the International Monetary Fund predicted in January a 0.5% global growth this year, the World Bank said world growth will be 5% below its potential, without giving a precise estimate.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Akamai Technologies Inc. (NASDAQ: AKAM) earnings prospects garnered an analyst's upgrade.
• Applied Materials Inc. (NASDAQ: AMAT) warned of a loss for the quarter due to the economic slowdown.
• Burger King Holdings Inc. (NYSE: BKC) posted lower Q2 profit and revenue that missed estimates.
• Clorox Co. (NYSE: CLX) Q2 profit fell but beat estimates, and it reaffirmed its full-year guidance.
• Dow Chemical Co. (NYSE: DOW) swung to a Q4 loss and warned that low demand will continue.
• Hartford Financial Group Inc. (NYSE: HIG) posted a loss, cut its dividend, and offered weak guidance.

Traders today were again fighting mostly over whether the DJIA should trade above the 8,000 mark. But the good news was that the "Bad Bank" plan may be replaced with Uncle Sam acting as an "insurer of last resort," which would put a floor in values. Treasury Secretary Geithner also noted that the U.S. would be very aggressive in its stimulus and stabilization pact. This all sent shares higher late in the day despite the plan's massive cost. Housing data in pending home sales failed to nudge any opinion, as the gains were due to distressed selling.

Today's unofficial closing bell levels:
DJIA: 8,078.36 +141.53 +1.78%
NASDAQ: 1,516.30 +21.87 +1.46%
S&P 500: 838.51 +13.07 +1.58%
52-Week Highs... we actually have some highs!
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I wrote yesterday about the current, relatively low level of the CBOE Volatility Index (VIX), comparing it to the 2002 -2003 triple-bottom. I concluded that low levels after a bear market could indicate that a capitulation had occurred.

There was more evidence of that yesterday.

When the market opened sharply lower, the VIX opened very close to its intra-day high but sharply reversed and closed the day just .68 higher at 45.52. And the Dow and the S&P 500 traded fractionally lower.

This week should flush out most of any remaining bad earnings news with some very big names, such as Dow Chemical (NYSE: DOW), Disney (NYSE: DIS), Merck (NYSE: MRK) and Motorola (NYSE: MOT) reporting today.