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Sanofi May Now Have Moved Past Its Most Challenging Period, Analyst Initiates At Buy

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Argus' Stephen Biggar initiated coverage of Sanofi SA (ADR) (NYSE: SNY) with a Buy rating and $50 price target as the company has moved past a challenging period.

According to Biggar, Sanofi has suffered through a period in which two of its best selling drugs, Lantus (diabetes) and Plavix (prevention of blood clots) have seen their patents expire. The company also had to deal with legal issues, including a court ruling in which its cholesterol-lowering therapy Praluent infringed on patents held by rival pharmaceutical firm Amgen, Inc. (NASDAQ: AMGN).

Amgen 'Largely Moved Past' Prior Headwinds

Biggar now believes Amgen has "largely moved past" these events and investors can look forward to the company benefiting from the strong demand for its multiple sclerosis drugs and management's cost-cutting initiatives.

Biggar added that Amgen also boasts a strong pipeline of new drugs, including Toujeo, which is a next-generation insulin product. Other notable therapies in the pipeline include dipilumab for atopic dermatitis and other inflammatory conditions.

Valuation Is Attractive

Biggar further noted that Sanofi's stock is trading at 15.4x his 2017 earnings per ADS forecast which is short of the average multiple of 16.2x for S&P 500 Pharma companies. The analyst believes the stock shouldn't trade at a discount to the group average, rather it should trade at a slight premium given the company's positioning for growth.

Sanofi also pays investors a sustainable dividend which has been raised over the past 23 years and currently yields around 3.5 percent.

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Latest Ratings for SNY

DateFirmActionFromTo
Nov 2018ArgusMaintainsBuyBuy
Nov 2018BarclaysUpgradesUnderweightEqual-Weight
Sep 2018Bank of AmericaUpgradesNeutralBuy

View More Analyst Ratings for SNY
View the Latest Analyst Ratings

Posted-In: Argus Lantus Patents PharmaceuticalAnalyst Color Price Target Initiation Analyst Ratings

 

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