Well, I just poured over Pfizer’s Q1 2013 press release (but I did not listen to any of the webcast — so, if there was some other gloss in the Q&A, forgive me, I’m blissfully unaware). And predictably, Pfizer is getting pounded on the NYSE this morning.
To be sure, Pfizer’s miss — at the sales line — was operational, as well as foreign currency related.
But the fact that Chairman Read has trimmed full year guidance is fascinating. This arguably creates nice “cover” for Merck to trim back a bit — citing currencies — and then over-achieve, in Q3 or Q4 2013 (if all goes well). And, if all doesn’t go well, then. . . Merck is still not hurt (as much), because it tamped down Wall Street expectations, here in early May.
Will New Merck Chairman Frazier take this moment of opportunity– to set himself up to overachieve in the back half of 2013?
Or will he stick to guidance that may become tough to meet, especially if the Japanese Yen stays as weak as it has here early in 2013? With Merck trading nice and high on the NYSE, he could take a little off, and not be banged too terribly.
Afterall, a very significant portion of Merck’s sales line is exposed to the Yen — over $5 billion in 2012 — that’s over 10 per cent of Merck’s total revenue. And the euro is a $13 billion exposure, as of the end of 2012 — that’s over 26 per cent.
To be clear, I am not in any way advocating that Merck “intentionally game” Wall Street — I just think being careful, and then setting oneself up to potentially be a hero, as the year end of 2013 approaches, is adroit management of those pesky Wall Street analysts.
All of that said, I suspect Merck will reaffirm that it is “comfortable with” current consensus Wall Street models, for the full year 2013 (Merck doesn’t formally provide self-issued, and management endorsed guidance), tomorrow morning, on the call. And that’s exactly what Pfizer did not do, this morning.
Even so, I’ll stick to the idea that currencies will influence Merck’s sales line, even in Q1 2013, more than most Wall Streeters currently expect — just as I said on Sunday (again).
See ya’ mañana! [Editor’s Note: that makes 3,100 posts on this blog! Woot!]