Merck stock hits highest level since 2003

NEW YORK (CNNMoney.com) -- Merck stock jumped to its highest level since 2003 on Friday after the drugmaker raised its earnings guidance, a federal judge in New Jersey dismissed a securities class action suit against the company, and a Texas judge was reportedly set to throw out about 1,000 Vioxx cases.

Merck (up $3.85 to $50.21, Charts) shares jumped more than 8 percent on the news, hitting a new 52-week high, with the gains coming despite a negative vote late Thursday from an expert panel that urged the FDA to reject the company's arthritis painkiller Arcoxia.

The stock closed at $50.21 a share Friday, up from the previous close of $46.36.

Barbara Ryan, analyst for Deutsche Bank North America, said she expected the advisory panel to shoot down Arcoxia and had not included additional sales figures in her estimates. The company's raised guidance was the key factor in driving up the stock price, she said.

After Thursday's Arcoxia decision, Merck raised its guidance for first-quarter earnings to 84 cents a share, excluding restructuring charges. The company had previously provided first-quarter guidance of 63 to 67 cents a share excluding charges.

Merck raised full-year 2007 earnings guidance to a range of $2.75 to $2.85 a share excluding restructuring charges. The company had previously announced guidance of $2.55 to $2.65 excluding charges.

Before Merck raised guidance, analyst consensus projected $2.66 earnings per share for full-year 2007 excluding restructuring charges, according to Thomson Financial, with earnings per share of 64 cents for the first quarter. By late morning on Friday, analyst consensus had increased projections to $2.73 earnings per share for 2007, and 72 cents earnings per share for the first quarter.

Separately, Merck said on Friday that a federal judge in the company's home state of New Jersey dismissed a securities class action suit filed by investors regarding the way the company disclosed information about Vioxx. The judge ruled that the lawsuit was invalid because of statute of limitations, Merck said.

In other news, The Wall Street Journal reported that a Texas judge is expected on Monday to throw out a group of 1,000 Vioxx cases and is making the decision based on a recently finalized FDA rule.

Merck pulled its former blockbuster Vioxx, an anti-arthritis painkiller worth $2.5 billion in annual sales, off the market in 2004. More than 20,000 lawsuits have been filed against the company since that time.

Arcoxia is a member of the same Cox-2 inhibitor drug class as Vioxx. The drug is available in 63 countries and totaled $265 million in 2006 sales.

Merck is the No. 4 U.S. drugmaker in terms of sales, behind Pfizer (up $0.21 to $26.67, Charts), Johnson & Johnson (up $0.43 to $62.35, Charts) and Abbott Laboratories (up $1.08 to $58.49, Charts).

Ryan does not own Merck stock but Deutsche Bank North America does seek business with the company.

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