A top diversified global healthcare company, Sanofi (SNY), gained nearly 19% over the past three years based on its focus on the research, development, manufacture and marketing of therapeutic solutions. The Paris, France-based company also has an impressive history of dividend growth. SNY  last paid an annual dividend of €3.15 in May 2020, which was an increase of 31.3% from €2.40 paid in May 2010.

SNY’s extensive lines of prescription medicines and vaccines and its dominance in consumer healthcare products are expected to keep driving the company’s growth. Moreover, SNY  has several projects in its pipeline, the approval of which could further accelerate the company’s growth.

The stock closed yesterday’s trading session at $47.61 and is currently trading 7.4% below its 52-week high of $55.

Let’s take a closer look at the factors that could shape SNY’s performance in the coming months:

Impressive Recent Financials

The company’s Specialty Care segment sales increased 18.3% year-over-year to €2.80 billion in the fourth quarter ended December 31, 2020. Sales were driven by strong Dupixent performance, which  increased 54.2% year-over-year to €982 million. Driven by record demand for differentiated influenza vaccines and continued growth of PPH, sales from its  Vaccines segment increased 14.6% year-over-year to €2.06 billion over the same period.

Its net income was reported at  €1.08 billion for the fourth quarter of 2020, which is a noteworthy improvement considering the company’s net loss of €10 million in the fourth quarter of 2019.

Decent Historical Growth

The company’s revenue has increased at a CAGR of 1.4% over the past five years, while its  EPS has increased at a CAGR of 48.8% over the past three years. SNY’s EBITDA increased at a CAGR of 3.3% over the past three years.

Several Products in Phase 3 Trials

A Phase 3 trial investigating amcenestrant with palbociclib as first line therapy for patients with ER(+) HER2(-) advanced breast cancer enrolled its first patients during the fourth quarter of 2020. Three Phase 3 trials for Dupixent were  also commenced, while Tolebrutinib, a brain penetrant BTK inhibitor, enrolled patients into a Phase 3 study for Primary Progressive and Secondary Progressive Multiple Sclerosis.

A Phase 3 study for itepekimab in Chronic Obstructive Pulmonary Disease (AERIFY-1) and for rilzabrutinib in adults and adolescents with persistent or chronic Immune Thrompocytopenia (LUNA3) have also started.

Inexpensive Valuation

The stock has a p/e Non-GAAP (FWD) of 10.01x versus the industry average  26.10x. Also, the stock’s PEG Non-GAAP (FWD) of 1.67x is 28.6% lower than the industry average 2.34x. Also, , in terms of p/s (FWD), SNY’s 2.66x is much lower than the industry average 10.03x.

Impressive Analyst Estimates

Analysts expect SNY’s  revenue to increase 8.5% for the quarter ending March 31, 2021, 14.6% for the quarter ending June 30, 2021 and 11.2% this year. Its EPS is expected to increase 11.4% this year, 16.1% next year and at a rate of 7.5% over the next five years.

Wall Street analysts expect the stock to hit $60.82 in the near term, which indicates a potential upside of 28.2%.

Favorable POWR Ratings

SNY has an overall rating of B, which equates to Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight different categories. Among  these categories, SNY has a grade of B for Value, in sync with the stock’s lower-than-industry valuation multiples. SNY has a B grade for Stability also.

In addition to the grades I’ve highlighted, you can check SNY’s POWR Ratings for Growth, Momentum, Sentiment and Quality here.

The stock is ranked #25 of 239 stocks in the Medical – Pharmaceuticals industry.

Click here to access several other top-rated stocks in the same industry.

Bottom Line

SNY is a great pick considering its dominant position in the healthcare space. The company’s continued growth in Dupixent sales should drive its revenues in the upcoming quarters. Moreover, now is a great time to buy the stock because  it is trading at a discount to its peers.

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SNY shares were trading at $47.24 per share on Thursday morning, down $0.37 (-0.78%). Year-to-date, SNY has declined -2.78%, versus a 4.07% rise in the benchmark S&P 500 index during the same period.

About the Author: Manisha Chatterjee

Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...

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