Sanofi stock plunges 15.5% after changes in 2025 profit target, loses $21 billion in market value
livemint.comReuters reported. This comes after Sanofi decided to reconsider the 32% profit target for 2025 to focus on "long-term profitability". The drugmaker has decided to increase the spending on immunology and inflammation drug development.
"Sanofi is reviewing potential separation scenarios, but believes that the most likely path would be through a capital markets transaction, by creating a listed entity headquartered in France," the French drugmaker said in a statement. The news led to a significant decline in the company's shares which touched their lowest level in more than eight months. Sanofi's stock is currently valued at a forward price-to-earnings ratio of 11 for the next 12 months.
This represents a lower valuation compared to AstraZeneca, which has a ratio of 16, as well as the global pharmaceutical index, which has an average ratio of 17. "Sanofi has traditionally had a low R&D productivity, it is yet to be seen whether the current management has been able to shift this narrative enough for investors to also back this investment," Terence McManus, fund manager at Switzerland's Bellevue Asset Management told news agency Reuters. With shares under pressure, all eyes are on CEO Paul Hudson who expressed confidence in the core innovative drugs business which according to him has improved enough to do without the predictable cash flows from consumer products.
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