Stock Market Update - Mon Oct 22 08:52:31 EDT 2007

Schering-Plough (SGP, 32.71) reported this morning third quarter income per share of $0.28, two cents short of analysts' estimates.  That figure excluded acquisition charges related to Organon BioSciences and upfront R&D payments.  The consensus estimate called for $0.30 per share.

Sales for the pharmaceuticals producer increased 9% to $2.8 billion compared with last year.  Schering-Plough's overall sales increase was underpinned by strong growth across its many branded lines, including Remicade, Nasonex, Temodar, and Clarinex, to name a few.

Gross margins widened to 67.1%, 15 basis points more than the previous year.  Rising selling and administrative costs, however, caused operating margins to decrease 11 basis points to 44.9%, excluding the company's research and demand expenses.

Schering-Plough's efforts to bolster its pipeline should help expand its narrow portfolio of drugs and create future sales growth.  We recently downgraded the health care sector to Market Weight, but believe pharmaceuticals such as Schering-Plough and Merck (MRK, 53.11) are "less sensitive to economic growth" and "would likely outperform during the current credit market concerns."

--Jeffrey Ham, Briefing.com