NEW YORK (TheStreet) -- Shares of Sanofi (SNY) are down 0.37% to $46.07 in pre-market trade after it was reported that the company's new CEO will continue its strategy of diversifying beyond new drug development, possibly through acquisitions, the French drugmaker's interim chief executive said, according to the German daily Handelsblatt, Reuters reports.
"We want to have businesses like consumer healthcare, veterinary medicine and vaccines that are less strongly driven by innovation but grow continuously and are more stable," Handelsblatt quoted Serge Weinberg as saying in an interview published today.
He said if there were opportunities, Sanofi would be "prepared and able" to make acquisitions in those areas, without being more specific. Weinberg said, though, that Sanofi was not interested in German peer Bayer's (BAYRY) diabetes device business.
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 a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. Among the primary strengths of the company is its expanding profit margins over time. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for SANOFI is rather high; currently it is at 61.62%. 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 13.74% trails the industry average.
- SANOFI's earnings per share declined by 24.6% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over 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 ($3.22 versus $1.90).
- SNY, with its decline in revenue, underperformed when compared the industry average of 8.8%. Since the same quarter one year prior, revenues fell by 23.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, SNY has underperformed the S&P 500 Index, declining 8.18% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it is one of the factors that makes this stock an attractive investment.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Pharmaceuticals industry. The net income has decreased by 24.4% when compared to the same quarter one year ago, dropping from $1,725.36 million to $1,305.09 million.
- You can view the full analysis from the report here: SNY Ratings Report