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Where Sanofi Stands after the 3Q17 Results

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Where Sanofi Stands after the 3Q17 Results PART 1 OF 8

Inside Sanofi’s Valuation after Its 3Q17 Earnings

Sanofi’s valuation

Sanofi (SNY) is one of the largest pharmaceutical companies dealing with specialized pharmaceutical products, generic medicines, consumer healthcare products, and human vaccines. The company is headquartered in Paris and reports its financial results in euros.

Sanofi’s 3Q17 earnings were released on November 2, 2017. It reported revenues of 9.05 billion euros for 3Q17, an operational growth of 4.7% YoY (year-over-year).

Inside Sanofi’s Valuation after Its 3Q17 Earnings

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Forward PE

PE (price-to-earnings) multiples are widely available and represent what one share can buy for an equity investor. On November 13, 2017, Sanofi was trading at a forward PE multiple of ~13.4x, compared with the industry average of 14.1x.

Competitors AstraZeneca (AZN), GlaxoSmithKline (GSK), and Novartis (NVS) are trading at a PE multiple of 22.2x, 12.3x, and 15.8x, respectively.

Forward EV-to-EBITDA

On a capital structure neutral basis, Sanofi was trading at a forward EV-to-EBITDA (earnings before interest, tax, depreciation, and amortization) multiple of 9.8x, which is lower than the industry average of ~10.5x as of November 13, 2017.

AZN, GSK, and NVS are trading at a forward EV-to-EBITDA of 14.4x, 8.1x, and 14.8x, respectively.

Analysts’ recommendations

As of November 13, 2017, Sanofi’s stock has risen ~7.6% over the past 12 months and ~11.3% YTD (year-to-date) 2017. Analysts estimate that the stock has the potential to return ~20% over the next 12 months, and the recommendations show a 12-month targeted price of $54.00 per share, compared with its last price of $45.00 per share on November 10.

Of the three analysts tracking Sanofi ADRs (American depositary receipts), two recommend a “buy,” and one recommends a “hold.” The consensus rating is 1.67, which suggests a moderate “buy” for momentum investors.

Of the 28 analysts tracking Sanofi stock, ten recommend a “buy,” and 15 recommend a “hold,” while three recommend a “sell.” The consensus rating for Sanofi stock is 2.68, which suggests a moderate “buy” for value investors.

Notably, the First Trust Value Line Dividend ETF (FVD) has 6.7% of its total investments in the healthcare sector, with 0.5% in Medtronic (MDT), 0.5% in Johnson & Johnson (JNJ), 0.5% in Pfizer (PFE), and 0.5% in Sanofi ADR (SNY).

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