Well-beaten down pharma stocks Merck and Schering-Plough both held their earnings call this morning. One take away from both calls is that management confidence is improving although analysts remain skeptical.
When Merck was pushed on its 10%-plus EPS growth, management indicated some confidence in its pipeline although did not want to discuss it in great detail. However, management did stick to the guidance provided in its December analyst meeting which should translate into EPS of $4.10 by 2010. Guidance appears to be based on modest revenue growth and cost controls.
From listening to a number of calls, virtually all of the old-line pharma companies expressed better confidence. A CNBC interview with Lilly's head mentioned that a lot of biotech projects initially funded in the 1990s might be coming to fruition.
It has been a tough decade for large pharma. There are hints that the worst is over. It is time to start looking at these companies again.
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