5 Reasons Why Sanofi SA (ADR) (SNY) is a Good Stock to Buy Now

Paris, France based Sanofi SA (ADR) (NYSE:SNY) is a global healthcare company possessing a diversified product portfolio. It has a presence in several therapeutic areas including cardiovascular diseases, diabetes, oncology, and central nervous system disorders, among others.

5 Reasons Why Sanofi SA (ADR) (SNY) is a Good Stock to Buy NowIt looks like a great stock to buy now, and here are many of the reasons to add Sanofi to your portfolio:

Favorable Rank and Solid VGM Score: Sanofi carries a Zacks Rank #2 (Buy) and a favorable VGM Score of ‘A’. Back-tested results show that only stocks with a VGM Style Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Rising Estimates & Attractive Valuation: Sanofi’s earnings estimates for 2017 went up 0.3% while that for 2018 moved up 1.2% in the past 60 days. Sanofi’s earnings performance has also been pretty impressive, with the company reporting positive surprises consistently. The average earnings beat over the last four quarters is 4.77%.

The stock also trades at an attractive valuation as evident from its favorable P/E, P/S and P/B ratios compared to the large cap pharmaceuticals industry.

Its P/E F12M (forward twelve months) is 14.44, which is close to the stock’s 6-month high P/E F12M of 14.55.

Nonetheless, the P/E still trades at a discount to the large cap pharmaceuticals industry’s P/E F12M of 15.5, which shows that the stock has the potential to grow further.

Similarly, price to sales (P/S) ratio for Sanofi is 3.0, a discount to the industry’s 4.1. Moreover, the price to book (P/B) ratio for Sanofi is 1.8, less than 4.3 for the industry.

Shares Trending Up in 2017: After declining in 2016, share price of the company has picked up in 2017.

Shares of Sanofi have risen 11.7% this year so far while the Zacks classified Large-Cap Pharma industry registered an increase of 5.3%.

Successful New Products & Strong Pipeline: Sanofi has several new products in its portfolio and candidates in its pipeline that can contribute to growth in 2017 and beyond. Products like Toujeo (diabetes), Aubagio and Lemtrada (multiple sclerosis) have been doing well and the trend is likely to continue. Importantly, Dupixent (dupilumab) was approved last month for the treatment of atopic dermatitis inthe U.S. while the regulatory application for the same indication is under review in the EU. Dupixent is also being evaluated for the treatment of asthma and nasal polyposis in phase III studies.

An important pipeline candidate is Kevzara (sarilumab), which was approved in Canada in Feb 2017 while in the U.S., the regulatory application is expected to be re-submitted to the FDA this year. The regulatory application in the EU was submitted in Jul 2016. Soliqua, a once-daily titratable fixed-ratio combination of Lantus and Lyxumia, was launched in the U.S. in Jan 2017 and is expected to be launched in Europe later this year. Other phase III candidates include sotagliflozin (SGLT-1 and SGLT-2 inhibitor for diabetes) and atuximab (multiple myeloma).

Meanwhile, Sanofi’s focus on streamlining its business and pursuing business development deals is encouraging. Sanofi has collaboration agreements/partnership deals with companies like Regeneron Pharmaceuticals Inc (NASDAQ:REGN), Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) and AstraZeneca plc (ADR) (NYSE:AZN) among others.

Aggressive Cost Cutting Initiatives: Sanofi reviewed its cost base and conducted an extensive review of its research and development operations in order to reallocate resources to the highest growth and most promising development programs. Sanofi expects to deliver cost savings of at least €1.5 billion by 2018. Moreover, its new operating model is expected to streamline the company’s business and drive long-term growth. In 2016, the company generated €650 million of savings and targets to double that amount in 2017.

Sanofi’s cost savings come from simplification of its organization, enhanced manufacturing productivity, streamlining of products portfolio and alignment of sales force.

Conclusion: Sanofi Poised for Growth Despite Some Obstacles 

Sanofi faces its share of challenges such as generic competition for many drugs including its blockbuster drug, Plavix and slower-than-expected uptake of new products like Praluent. Also, the outlook for its Diabetes franchise is bleak.

However, we believe that new drug approvals, a solid pipeline and aggressive savings will pave the way for growth this year.

Zacks’ Best Private Investment Ideas                                                     

While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public. Starting today, for the next month, you can follow all Zacks’ private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.

Click here for Zacks’ private trades >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Sanofi (SNY): Free Stock Analysis Report

Astrazeneca PLC (AZN): Free Stock Analysis Report

Regeneron Pharmaceuticals, Inc. (REGN): Free Stock Analysis Report

Alnylam Pharmaceuticals, Inc. (ALNY): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

More From InvestorPlace


Article printed from InvestorPlace Media, https://investorplace.com/2017/04/5-reasons-why-sanofi-sny-is-a-good-stock-to-buy-now/.

©2021 InvestorPlace Media, LLC