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Market Update

Earnings on Tap: Chevron, Merck

Rising oil prices could boost Chevron earnings, and Merck's operating costs might fall.

Oil major  Chevron (CVX), which is slated to announce quarterly results before the stock market opens Friday, is expected to post earnings of $3.51 per share, according to a consensus of Wall Street analysts, compared with $2.70 per share in the prior-year quarter.

The firm, in a recent investor update, said its production rate had come down in the quarter, but higher oil and natural gas prices would likely offset any impact on profits. However, analysts might want to know about the progress of production ramp-up at new wells to make up for the shortfall of output from older projects.

Investors will also likely focus on whether the company is on track for its 1% increase in production for this year.

Also posting earnings before the bell is  Merck (MRK). Analysts, on average, expect the firm to clock EPS of $0.95, rising from $0.24 per share in the same quarter last year.

Company-watchers may seek updates on the launch of the drug Victrelis (boceprevir) for hepatitis C, which the Food and Drug Administration approved in May. The potential success of Victrelis is significant for Merck, with blockbuster asthma-drug Singulair poised to lose patent in 2012 and after the patent loss of hypertension drugs Cozaar and Hyzaar in 2010.

The firm's operating costs might also be eyed and any reduction would be seen as progress toward achieving greater synergies from its 2009 acquisition of Schering-Plough.

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