BofA Upgrades Sanofi, Names 3 Growth Drivers For Pharma Stock

Sanofi SA (ADR) SNY, is approaching a growth inflection point, according to Bank of America Merrill Lynch. The sell-side firm is projecting 6-percent earnings per share growth for the pharmaceutical company. 

The Analyst

Analyst Graham Parry upgraded Sanofi from Neutral to Buy and raised the price target from $80 to $95.

The Thesis

Parry considers the combination of new products, consumer health and vaccines as having the ability to balance out the "diminishing heawind of diabetes." (See his track record here.) 

The analyst said he has growing confidence in the following growth drivers for Sanofi: 

• Dupixent's strong launch in dermatitis. 
• Expectations of 4-percent consumer growth in 2019.
• A recovery in vaccines this year on the basis of a resolution of manufacturing issues in China.

“We expect diabetes to become less of a headwind into 2019 and beyond, declining 6-percent [in 2019] vs. 13 percent in 2017-18," Parry said.

"Although price pressure for U.S. Lantus has not abated, additional biosimilars may launch [in] 2019/20, and we continue to forecast 20-30-percent year-over-year sales declines going forwards, it now only represents 3 percent of 2019  group sales vs. 13 percent in 2014. We expect growth in other regions [and] products to increasingly offset." 

Price Action

Sanofi shares were up 1.2 percent at $42.60 before the close Monday. 

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