Schering-Plough posted strong profits and double-digit sales growth yesterday--but its stock plunged. So what gives?
Well, it's true that the drug maker doubled profits only on one-time gains; excluding those, the company's earnings per share were only 28 cents, two pennies lower than analysts had expected. And there's the rub: Expectations. After years of low expectations, Merck's profits rose 62 percent; its stock rose $1.53 to $54.64. After two years of strong performance and high expectations, Schering's stock took a $4.37 hit, falling to $28.34.
Miss the expectations mark and people start asking questions, too. Such as, how will Schering-Plough make up for the slowdown in growth of its cholesterol drugs Vytorin and Zetia (both joint ventures with Merck)? Can it profitably absorb Organon BioSciences later this year? And if there's on thing Wall Street doesn't like, it's questions.
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