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Sanofi Down 10% in 3 Months: How Should You Play the Stock?
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Sanofi’s (SNY - Free Report) stock has declined 10.2% in the past three months. However, a lot of this price decline was due to the downtrend of the overall drug and biotech sector, which performed poorly in the past three months after Trump announced the appointment of Robert F. Kennedy Jr., a vaccine skeptic, as the head of Health and Human Services, the agency that oversees the FDA.
This, coupled with disappointing third-quarter sales and profits, guidance cuts and pipeline setbacks, took a toll on the overall drug and biotech industry’s performance.
The decline in Sanofi’s stock price and the drug/biotech sector’s downturn have left investors confused about how to play the stock. Let’s understand the company’s strengths and weaknesses to better analyze how to play Sanofi’s stock amid the recent price decrease.
Dupixent: A Key Top-Line Driver for SNY
Sanofi’s immunology drug, Dupixent has become the key top-line driver as it enjoys strong demand across all approved indications and geographies. Dupixent is now approved in several countries, including the United States and EU, for six type II inflammatory diseases, namely severe chronic rhinosinusitis with nasal polyposis, severe asthma, moderate-to-severe atopic dermatitis, eosinophilic esophagitis, prurigo nodularis and chronic obstructive pulmonary disease (COPD).
Dupixent is now annualizing at close to €11.0 billion in sales after almost eight years on the market. It leads the new-to-brand prescription market share across all its approved indications in the United States. Outside the United States, the drug is now approaching blockbuster status in a single quarter. Sanofi expects Dupixent to achieve more than €13 billion in sales in 2024 and a low double-digit CAGR till 2030.
SNY Boasts a Strong Vaccine Segment
Sanofi possesses one of the world’s leading vaccine operations, with total annual sales of more than €5 billion in the past five years. Its Vaccines unit has delivered mid-to-high-single-digit sales growth since 2018, and the segment is expected to grow at a high single-digit range in 2024. Sanofi continues to expand its vaccine business further. Sanofi has at least five vaccine candidates, which are expected to enter phase III development by 2025. Sanofi expects annual net sales to be more than €10 billion from its Vaccines unit by 2030, backed by its innovation efforts.
SNY’s New Products & Strong Pipeline Can Drive Long-Term Growth
Sanofi’s new products like novel recombinant factor VIII therapy, Altuviiio, respiratory syncytial virus (RSV) antibody, Beyfortus (in partnership with AstraZeneca [(AZN - Free Report) ]), Pompe disease therapy, Nexviazyme and chronic graft-versus-host disease drug, Rezurock are contributing to top-line growth. Revenues from these products are offsetting the impact of generic competition on Aubagio's sales.
Sanofi is investing in these launches to optimize their success. Sanofi believes that its three new products launched/added in 2023, Altuviiio, Beyfortus and Tzield (added from the 2023 acquisition Provention Bio), together can add up to at least €5 billion in peak sales. Beyfortus sales are expected to be around 1.5 billion euros in 2024, which exceeds the company’s prior guidance for Beyfortus to reach blockbuster status.
Sanofi has a strong immunology and neuro-inflammation pipeline, which includes 12 potential blockbuster assets in phase III development, including amlitelimab, frexalimab and tolebrutinib. Sanofi expects to have more than 35 projects in phase III by 2025.
SNY’s Price, Valuation & Estimate Movement
Sanofi’s stock has declined 5.3% in the past year compared with a decrease of 1.7% for the industry.
SNY Stock Underperforms Industry
Image Source: Zacks Investment Research
From a valuation standpoint, Sanofi appears attractive relative to the industry. Going by the price/earnings ratio, the company’s shares currently trade at 10.71 forward earnings, lower than 15.81 for the industry. The stock also trades lower than its 5-year mean of 11.85. The stock is also much cheaper than other large drugmakers like Novo Nordisk, AbbVie (ABBV - Free Report) and Lilly (LLY - Free Report) .
SNY Stock Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2024 earnings has declined from $4.30 per share to $4.04 per share over the past 30 days. For 2025, earnings estimates have declined from $4.76 per share to $4.59 per share over the past 30 days. The EPS estimate has declined to exclude costs related to its Consumer Healthcare (CHC) unit, which the company plans to separate through the creation of a publicly-listed entity headquartered in Paris to be called Opella.
Sanofi is conducting exclusive negotiations with CD&R, a U.S.-based private equity firm, to sell its 50% controlling stake in Opella.
SNY Estimate Movement
Image Source: Zacks Investment Research
Stay Invested in SNY Stock
Sanofi faces its share of headwinds like generic erosion of key drug Aubagio in all key markets and lower sales from mature products, which are hurting sales. Other headwinds include the weak performance of diabetes drugs and regular negative pipeline developments.
However, Sanofi’s reasonable valuation, improving top-line performance, potential contributions from new product launches and positive pipeline progress are good enough reasons for those who own this Zacks Rank #3 (Hold) stock to stay invested.
Image: Bigstock
Sanofi Down 10% in 3 Months: How Should You Play the Stock?
Sanofi’s (SNY - Free Report) stock has declined 10.2% in the past three months. However, a lot of this price decline was due to the downtrend of the overall drug and biotech sector, which performed poorly in the past three months after Trump announced the appointment of Robert F. Kennedy Jr., a vaccine skeptic, as the head of Health and Human Services, the agency that oversees the FDA.
This, coupled with disappointing third-quarter sales and profits, guidance cuts and pipeline setbacks, took a toll on the overall drug and biotech industry’s performance.
The decline in Sanofi’s stock price and the drug/biotech sector’s downturn have left investors confused about how to play the stock. Let’s understand the company’s strengths and weaknesses to better analyze how to play Sanofi’s stock amid the recent price decrease.
Dupixent: A Key Top-Line Driver for SNY
Sanofi’s immunology drug, Dupixent has become the key top-line driver as it enjoys strong demand across all approved indications and geographies. Dupixent is now approved in several countries, including the United States and EU, for six type II inflammatory diseases, namely severe chronic rhinosinusitis with nasal polyposis, severe asthma, moderate-to-severe atopic dermatitis, eosinophilic esophagitis, prurigo nodularis and chronic obstructive pulmonary disease (COPD).
Dupixent is now annualizing at close to €11.0 billion in sales after almost eight years on the market. It leads the new-to-brand prescription market share across all its approved indications in the United States. Outside the United States, the drug is now approaching blockbuster status in a single quarter. Sanofi expects Dupixent to achieve more than €13 billion in sales in 2024 and a low double-digit CAGR till 2030.
SNY Boasts a Strong Vaccine Segment
Sanofi possesses one of the world’s leading vaccine operations, with total annual sales of more than €5 billion in the past five years. Its Vaccines unit has delivered mid-to-high-single-digit sales growth since 2018, and the segment is expected to grow at a high single-digit range in 2024. Sanofi continues to expand its vaccine business further. Sanofi has at least five vaccine candidates, which are expected to enter phase III development by 2025. Sanofi expects annual net sales to be more than €10 billion from its Vaccines unit by 2030, backed by its innovation efforts.
SNY’s New Products & Strong Pipeline Can Drive Long-Term Growth
Sanofi’s new products like novel recombinant factor VIII therapy, Altuviiio, respiratory syncytial virus (RSV) antibody, Beyfortus (in partnership with AstraZeneca [(AZN - Free Report) ]), Pompe disease therapy, Nexviazyme and chronic graft-versus-host disease drug, Rezurock are contributing to top-line growth. Revenues from these products are offsetting the impact of generic competition on Aubagio's sales.
Sanofi is investing in these launches to optimize their success. Sanofi believes that its three new products launched/added in 2023, Altuviiio, Beyfortus and Tzield (added from the 2023 acquisition Provention Bio), together can add up to at least €5 billion in peak sales. Beyfortus sales are expected to be around 1.5 billion euros in 2024, which exceeds the company’s prior guidance for Beyfortus to reach blockbuster status.
Sanofi has a strong immunology and neuro-inflammation pipeline, which includes 12 potential blockbuster assets in phase III development, including amlitelimab, frexalimab and tolebrutinib. Sanofi expects to have more than 35 projects in phase III by 2025.
SNY’s Price, Valuation & Estimate Movement
Sanofi’s stock has declined 5.3% in the past year compared with a decrease of 1.7% for the industry.
SNY Stock Underperforms Industry
From a valuation standpoint, Sanofi appears attractive relative to the industry. Going by the price/earnings ratio, the company’s shares currently trade at 10.71 forward earnings, lower than 15.81 for the industry. The stock also trades lower than its 5-year mean of 11.85. The stock is also much cheaper than other large drugmakers like Novo Nordisk, AbbVie (ABBV - Free Report) and Lilly (LLY - Free Report) .
SNY Stock Valuation
The Zacks Consensus Estimate for 2024 earnings has declined from $4.30 per share to $4.04 per share over the past 30 days. For 2025, earnings estimates have declined from $4.76 per share to $4.59 per share over the past 30 days. The EPS estimate has declined to exclude costs related to its Consumer Healthcare (CHC) unit, which the company plans to separate through the creation of a publicly-listed entity headquartered in Paris to be called Opella.
Sanofi is conducting exclusive negotiations with CD&R, a U.S.-based private equity firm, to sell its 50% controlling stake in Opella.
SNY Estimate Movement
Stay Invested in SNY Stock
Sanofi faces its share of headwinds like generic erosion of key drug Aubagio in all key markets and lower sales from mature products, which are hurting sales. Other headwinds include the weak performance of diabetes drugs and regular negative pipeline developments.
However, Sanofi’s reasonable valuation, improving top-line performance, potential contributions from new product launches and positive pipeline progress are good enough reasons for those who own this Zacks Rank #3 (Hold) stock to stay invested.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.