* Says adjusted core profit (EBITDA) to grow slightly

* MS drug sales down 5 percent in fourth quarter

* Shares up 0.8 percent (Adds analyst quote, share price)

By Ludwig Burger

DARMSTADT, Germany, March 3 (Reuters) - Merck KGaA said underlying core profit would rise slightly this year, or at worst stagnate, as the German firm develops a cancer treatment and its best-selling drug Rebif battles stiff competition.

Sales of Merck's multiple sclerosis medicine Rebif slipped 5 percent in the last three months of 2014, after adjustments for currency fluctuations. While this was a smaller decline than expected, the company predicted more sales falls this year.

The established injectable multiple sclerosis drug is under threat from new oral treatments for the debilitating disease, such as Novartis's Gilenya, Sanofi's Aubagio and Biogen Idec's Tecfidera.

Merck, which makes drugs, high-tech chemicals and laboratory supplies, said fourth-quarter earnings before interest, taxes, depreciation, amortisation (EBITDA) and one-off items rose 10.5 percent to 878 million euros ($983 million).

Earnings were lifted by strong demand for the liquid crystals used in the latest high-definition TVs and mobile devices, and was above the 870 million euros expected on average by analysts in a Reuters poll..

Merck shares traded 0.8 percent higher at 1024 GMT, after paring earlier gains of up to 2 percent but still ahead a flat European healthcare sector gauge and a 0.5 percent higher chemical index.

Equinet Bank analyst Marietta Miemietz said while the results were strong the earnings projection was somewhat below her expectations. She attributed this to higher corporate overhead costs and an "element of conservatism" on Merck's part.

After years of setbacks in drug development, Merck scored a rare success in November when it bagged Pfizer as development partner for an experimental cancer immunotherapy.

The new cancer treatment is part of a class of drugs known as anti-PD-L1 therapies which work by blocking a tumour's ability to evade the immune system's defences.

The family-controlled German company also agreed in September to acquire Sigma-Aldrich Corp for $17 billion in cash, the biggest takeover in Merck's history, and plans to wrap up the deal in the middle of this year.

Merck said its outlook for 2015 did not yet take into account the impact of the planned takeover of the U.S.-based lab supplies maker. ($1 = 0.8932 euros) (Editing by David Clarke)