Analyst Upgrades Sanofi On COVID-19 Vaccine Optimism

Sanofi SA SNY shares traded higher by 0.4% on Monday after the company scored an analyst upgrade.

The Analyst: SVB Leerink analyst Geoffrey Porges upgraded Sanofi from Market Perform to Outperform and raised his price target per U.S. ADR from $69.61 to $71.37.

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The Thesis: In the upgrade note, Porges said Sanofi’s Dupixent monoclonal antibody used for allergic diseases is one of the pharma industry’s biggest blockbusters. However, Porges raised his target for the stock based on expectations for Sanofi’s Phase III test results on its recombinant COVID-19 vaccine using a GlaxoSmithKline plc GSK protein adjuvant. He is projecting a 65% rate of success for the vaccine.

“We believe amcenestrant and developments in COVID vaccine programs (both mRNA and recombinant protein) will be significant catalysts for the stock later this year and expect the stock to easily recover to its recent highs, and then continue to outperform most of its peers over the next few quarters,” Porges said.

In addition, in anticipation of the closing of the Kadmon acquisition, Porges has added Rezurock for chronic graft-versus-host disease and other indications to his Sanofi model. He estimates peak sales of more than $700 million.

Porges said Sanofi management has made better strategic decisions in recent years and has set the company up with a strong pipeline of several potential quality drug candidates. In the meantime, Sanofi’s financials are slowly improving, and Porges is anticipating significant earnings and revenue beats.

Benzinga’s Take: Strong Dupixent growth, a solid and growing drug pipeline and a new management team focused on improving the balance sheet make Sanofi appear to be an excellent investment.

However, one bad batch of data can completely change the thesis for pharma stocks, so investors should proceed with caution.

Image by ronstik from Pixabay