Deutsche Bank Downgrades Sanofi SA

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Sanofi SA (ADR) SNY was downgraded from Buy to Hold and had its price target reduced from €93 to €78 by Deutsche Bank on Wednesday.

Analysts led by Mark Clark noted that the company cautioned that "sales in diabetes - its biggest therapy area - will only be "stable" in 2015 comes as an unwelcome surprise and leads us to cut our EPS forecasts by 7-15 percent pa over 2015-18E."

Clark concluded that "this appears to be a fundamental and far-reaching change in outlook."

"The company blamed "aggressive discounting by competitors" (which we find hard to rationalise in a duopoly). Given the importance of diabetes to Sanofi (21 percent of YTD sales and likely a higher proportion of EBIT), we have lowered our EPS forecasts," according to Clark.

The report concluded that "given the surprise warning on diabetes, the performance of ‘growth platforms’ (and within this, diabetes) will be closely scrutinized in the coming quarters. Furthermore, the reduced growth outlook will place extra onus on pipeline delivery (notably from Toujeo, alirocumab and the dengue fever vaccine), so that the 20 November R&D event assumes even greater significance."

Sanofi SA recently traded at $45.31, down 5.7 percent.

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Posted In: Analyst ColorDowngradesPrice TargetAnalyst RatingsDeutsche BankMark Clark
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