What Happened to Sanofi’s Valuation after 4Q16?

With the rising sales in its Genzyme, animal health, and vaccines businesses, Sanofi (SNY) has reported a growing top line over the past few quarters. On February 16, 2017, Sanofi was trading at a forward PE (price-to-earnings) multiple of ~13.9x, as compared to the industry average of 15.7x.

For the past year, the company’s forward PE has been in the range of 12.0x–16.2x. Competitors GlaxoSmithKline (GSK), AstraZeneca (AZN), and Novo Nordisk (NVO) are trading at higher PE multiples of 14.4x, 15.5x, and 15.5x, respectively.

On a capital structure neutral and excess cash-adjusted basis, Sanofi was trading at a forward EV-to-EBITDA multiple of 9.8x, as compared to the industry average of ~11.6x, as on February 16, 2017.

The fundamental factors affecting stock prices and valuations include the performance of new and existing products, new and existing collaborations, and other factors including results of clinical trials and product approvals.

Sanofi stock has risen ~11.7% during the past 12 months, which is much lower than the PowerShares International Dividend Achievers ETF’s (PID) value, which has improved ~24.3% during the same period. Notably, PID invests 1.4% of its total assets in Sanofi.

Analysts estimate that Sanofi stock has the potential to return ~12.5% over the next 12 months. Wall Street analysts’ recommendations show a 12-month targeted price of $49.00 per share, as compared to the last price of $43.50 per share on February 16, 2017.

Notably, 67% of the analysts recommend a “buy” for the stock, while 33% of the analysts recommend a “hold.” (Changes in analysts’ estimates and recommendations are based on changing trends in the stock price.)