NEW YORK (TheStreet) -- Sanofi (SNY) reportedly held talks with Abbott Laboratories (ABT), Mylan (MYL) and private equity firms over the possible sale of a $8.5 billion portfolio of mature drugs, according to an internal document seen by Reuters.
The 25-page document details a plan presented to the company's investment committee on May 6 called the "Phoenix project."
It shows Sanofi is considering whether to sell, carve out or create a joint venture for a portfolio of some 200 mature drugs that includes blood thinner Plavix, anti-epileptic Depakine and antibiotic Pyostacine, Reuters reports.
Shares of Sanofi are up.29% to $51.58.
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, increase in net income, expanding profit margins and growth in earnings per share. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 5.6%. Since the same quarter one year prior, revenues slightly increased by 4.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Pharmaceuticals industry average. The net income increased by 17.8% when compared to the same quarter one year prior, going from $1,267.50 million to $1,493.43 million.
- The gross profit margin for SANOFI is rather high; currently it is at 59.71%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 13.67% trails the industry average.
- SANOFI has improved earnings per share by 16.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SANOFI reported lower earnings of $1.90 versus $2.44 in the prior year. This year, the market expects an improvement in earnings ($3.53 versus $1.90).
- In its most recent trading session, SNY has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: SNY Ratings Report