NEW YORK (TheStreet) -- Shares of Sanofi (SNY) - Get Sanofi Report are down 8.07% to $48.56 in pre-market trade after the French drugmaker said sales of diabetes products probably won't grow next year because of mounting competition in the U.S., Bloomberg reports.
Diabetes products account for more than 20% of sales at Paris-based company. Chief Executive Officer Chris Viehbacher said the drugmaker cut prices for its best-selling product, the Lantus insulin, last quarter to get on U.S. drug benefit managers' reimbursement lists in the face of competition from companies including Novo Nordisk A/S.
"People are getting a bit more wary about the whole diabetes space with regards to price increases of the new products, but also price decreases of the existing ones," Fabian Wenner, an analyst at Kepler Cheuvreux in Zurich, told Bloomberg. The stock slide is "brutal, possibly a bit excessive," he added.
TheStreet Ratings team rates SANOFI as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate SANOFI (SNY) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, compelling growth in net income, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 8.4%. Since the same quarter one year prior, revenues slightly increased by 3.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Pharmaceuticals industry. The net income increased by 75.1% when compared to the same quarter one year prior, rising from $602.04 million to $1,054.28 million.
- The gross profit margin for SANOFI is rather high; currently it is at 60.33%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, SNY's net profit margin of 9.51% significantly trails the industry average.
- SNY's debt-to-equity ratio is very low at 0.29 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.81 is somewhat weak and could be cause for future problems.
- You can view the full analysis from the report here: SNY Ratings Report