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Analyst downgrades Merck on Januvia sales worries

NEW YORK (AP) -- A BMO Capital Markets analyst downgraded shares of Merck & Co. Thursday, saying she is concerned about sales of the company's diabetes drug Januvia.

THE OPINION: Analyst Alex Arfaei lowered the rating to "Market Perform" from "Outperform," saying Januvia sales are being hurt by increased competition from other drugs like Johnson & Johnson's Invokana, and Merck may respond to recent drug development setbacks by buying another company.

Merck said sales of Januvia declined by 4 percent to $884 million in the first quarter. FactSet says analysts expect Merck report $1.27 billion in Januvia sales for the second quarter.

"Januvia will likely disappoint again," Arfaei said, reducing the price target on Merck shares to $51 from $52.

The Whitehouse Station, N.J., company is scheduled to report its quarterly results before the market opens on July 30. On average, analysts expect Merck to post net income of 83 cents per share and $11.29 billion in total revenue.

THE STOCK: Shares of Merck fell 73 cents to close at $47.40. The stock is up nearly 16 percent since the start of 2013.