- Thursday, October 17, 2024
Shares of the French pharmaceutical company Sanofi experienced a significant decline of up to 16% on Friday. This drop was primarily attributed to the company's decision to increase its research-and-development expenses and its expectations for higher taxes. As a result, Sanofi's projected "business EPS" is anticipated to decrease by a low single-digit percentage next year. This downward trend is influenced by the escalating costs of research and development, as well as changes to global tax regulations, which will raise the tax rate from 19% to 21% in the upcoming year.
Initially, analysts had estimated a 6% growth in business EPS for the next fiscal year. However, Sanofi's recent announcement has sparked disappointment among investors. Additionally, the company has abandoned its goal of achieving a 32% profit margin by 2025. Instead, Sanofi plans to separate its consumer health business, potentially through a spin-off during the fourth quarter of 2024.
CEO Paul Hudson expressed the company's new strategic direction, stating, "In this new chapter of our strategy, we are deepening our investment in R&D, taking steps toward becoming a pure play biopharma company, and further optimizing our cost structure. This will help us accelerate innovation and strengthen our growth drivers, while ensuring long-term profitability and enhancing shareholder value."
Sanofi reported third-quarter results that were relatively close to consensus estimates. The company's adjusted earnings per share decreased by 11.5% to €2.55, compared to analyst predictions of €2.61. Similarly, Sanofi's revenue declined by 4.1%, amounting to €11.96 billion ($12.63 billion), which slightly missed the consensus estimate of €12.1 billion.
Despite recognizing the strategic value of separating the consumer health segment, industry analysts, led by Emily Field from Barclays, anticipate a negative reaction in the company's stock due to the revised figures for 2024 and 2025.
All Rights Reserved © 2024
Post a comment