Sanofi SNY will report results for the third quarter of 2022 on October 28 before the market opens. In the latest reported quarter, the company delivered an 8.24% earnings surprise.
The big drugmaker’s performance beat profit expectations in each of the past four quarters. The company delivered a four-quarter earnings surprise of 9.37%, on average.
Sanofi Price and Surprise EPS
Sanofi price-eps-surprise | Sanofi Quote
Sanofi shares are down 18.5% this year compared to a 1.5% decline for the industry.
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Factors to consider
The growth of Sanofi’s top line is likely to have been driven by higher sales from the Special Care business, driven primarily by its blockbuster drug Dupixent.
Dupixent sales in the quarter are likely to have been driven by continued growth in atopic dermatitis and continued acceptance of asthma and chronic rhinosinusitis with indications of nasal polyposis. Dupixent was approved for its fifth disease indication, prurigo nodularis, in September, though it is unlikely to have contributed much to third-quarter sales. Please note that Sanofi markets Dupixent in association with Regeneron REG. In addition to the currently approved indications, Sanofi and Regeneron are studying Dupixent in a wide range of diseases caused by type 2 inflammation or other allergic processes in late-stage studies. Our estimates for Dupixent stand at €2.24 billion.
Sales of Sanofi’s rare disease, rare blood disorder and oncology drugs are likely to have increased in the third quarter. Our estimates for rare diseases, rare blood disorders and oncology drugs amount to €865.8 million, €330.1 million and €220.2 million, respectively.
However, a slight decline in sales of the immunology and neurology franchise is expected in the third quarter. In the General Medicine unit, the growth of core drugs (such as Multaq, Toujeo, Praluent and Rezurock) is likely to have been offset by lower sales of secondary drugs (such as Lantus and Aprovel).
In Vaccines, increased sales of flu shots and a recovery in demand for travel and booster shots with the relaxation of pandemic-related travel restrictions have likely weighed on the unit’s sales performance. . Our estimates for Vaccines are 2,860 million euros.
At CHC, strong sales performance is expected in the Cough & Cold, Allergy, Digestive Wellness and Pain Care categories. Our estimates for the CHC unit are €1.28 billion
However, the company expects gross margins to be lower in the third and fourth quarters than in the first half, as underlying improvements are expected to be offset by macroeconomic headwinds such as rising energy costs, transportation and labor costs. The impact of VBP on insulins in China is also expected to have affected gross margins.
Our tested model does not conclusively predict an increase in earnings for Sanofi. The combination of a positive ESP Earnings and a Zacks rank #1 (strong buy), 2 (buy) or 3 (hold) increases the odds of winning profits. But that is not the case here.
ESP Earnings: Sanofi’s earnings ESP is 0.00% as the Zacks consensus estimate, as well as the most accurate estimate, sits at $1.31 per share. You can discover the best stocks to buy or sell before they are reported with our ESP filter gains.
Zacks Rank: Sanofi has a Zacks #3 rank. You can see the full list of today’s Zacks #1 rank stocks here.
Actions to consider
Here are some drug stocks that have the right mix of elements to outperform gains this time around:
Eli Lilly LLY has a +0.58% win ESP and a Zacks #3 rank. You can see the full list of today’s Zacks #1 rank stocks here.
Lilly shares are up 26% this year so far. Lilly missed earnings estimates in three of the last four quarters. Lilly has a negative four-quarter earnings surprise of 5.11%, on average. LLY is scheduled to release its third quarter 2022 results on November 1.
BioMarin Pharmaceutical BMRN has a Win ESP of +10.77% and a Zacks Rank of 2.
BioMarin shares are up 1.7% this year so far. BioMarin beat estimates in each of the last four quarters, delivering a 98.90% earnings surprise. BioMarin is set to report earnings on October 26 after the closing bell.
Stay on top of upcoming earnings announcements with the Zacks Earning Schedule.
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