Zacks_Analysts' Blog : Neutral Stance on Sanofi Retained - Analyst Blog

We are reaffirming our Neutral stance on Sanofi (SNY">SNY) with a target price of $38.00. The French pharma giant is one of the largest biopharmaceutical companies in the world and recorded 2010 sales of approximately $41.4 billion.

Sanofi possesses a diversified product portfolio with a strong presence in several therapeutic areas including cardiovascular diseases, diabetes, oncology and central nervous system (CNS) disorders. In fact, Sanofi has perhaps one of the strongest cardiovascular franchises amongst all large-cap pharmaceuticals. Additionally, the company boasts strong vaccine operations.

However, several products in Sanofi’s portfolio are already facing or are likely to face generic competition. We expect 2012 earnings to be hit by the loss of US exclusivity on Plavix and Avapro. While new product launches should contribute significantly to revenues in the early part of the decade, we expect Sanofi to continue to contain operating costs in order to grow earnings in the face of waning sales of some of its biggest products.

We also expect the company to increase its revenue through additional partnering deals and acquisitions. The Genzyme acquisition has not only brought in additional revenues, it has also strengthened Sanofi’s pipeline.

Currently, Sanofi boasts of six growth platforms: Emerging Markets, Diabetes, Vaccines, Consumer Health Care, Innovative Products, and Animal Health apart from Genzyme.

These growth platforms along with Genzyme are expected to generate more than €22 billion in sales in 2011. Moreover, they are expected to account for more than 80% of Sanofi’s sales in 2015.

We, therefore, remain Neutral on the stock, which carries a Zacks #3 Rank (short-term Hold rating).