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Merck & Co. Inc. (MRK - Analyst Report) is scheduled to report its fourth quarter 2012 results on Feb 1, 2013 before the opening bell.

Last quarter, the company posted a 2.15% positive surprise. Let’s see how things are shaping up prior to the announcement.

Growth Factors in the Third Quarter of 2012

Merck reported third quarter 2012 earnings per share (excluding special items) of 95 cents, a couple of cents ahead of the Zacks Consensus Estimate and 1.1% above the year-ago earnings. Though revenues declined 4.4% year over year, earnings benefited from cost control and a lower tax rate.

Even though headwinds, such as genericization  of Singulair, EU pricing pressure, unfavorable currency movement, US health care reform, the Remicade/Simponi transition and pipeline setbacks are expected to continue to hurt Merck, some of the company’s recent launches should start contributing significantly to the top line in the forthcoming quarters.

Earnings Whispers?

Our proven model does not conclusively show that Merck is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1 (Strong Buy) or at least Zacks Rank #2 (Buy) or Zacks Rank #3 (Hold) for this to happen. This is not the case here as you will see below.

Zacks ESP: The Most Accurate estimate stands at 81 cents. It is in line with the Zacks Consensus Estimate. This implies an earnings ESP of 0.00%.

Zacks Rank #3 (Hold): Merck carries a Zacks Rank of 3. The combination of Merck’s Zacks Rank #3 and 0.00% ESP makes a surprise prediction difficult.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Sanofi (SNY - Analyst Report) has earnings ESP of +9.21% and carries a Zacks Rank #2 (Buy).

Mylan Inc. (MYL - Analyst Report) has earnings ESP of +4.69% and carries a Zacks Rank #2 (Buy).

Actavis Inc. (ACT - Analyst Report) has earnings ESP of +3.92% and carries a Zacks Rank #3 (Hold).

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