Sanofi forecasts stronger profit growth, announces €5 billion stock buyback

Investing.com -- Sanofi (EPA:SASY) (NASDAQ:SNY) announced on Thursday that it plans to repurchase €5 billion ($5.21 billion) worth of shares this year and may take a more active approach to acquisitions in the near term. The move comes as the company prepares to sell a significant stake in its consumer health business.

The sale of Sanofi's controlling stake in Opella is expected to be finalized as early as the second quarter, marking its full transition into a dedicated pharmaceuticals and vaccines company.

"We have always been very active in the M&A (mergers and acquisitions) space. We may be a bit more in the near future due to the fact that we have a strong balance sheet," said Sanofi CFO François Roger on a media call. He emphasized, however, that the company would maintain a balanced approach to potential deals.

The announcement came a day after Sanofi, one of the world’s top vaccine manufacturers, released its fourth-quarter earnings report.

For the quarter, Sanofi’s business operating income, excluding one-off items, fell 7.7% to €2.08 billion, aligning with analyst expectations.

Sales of Beyfortus, a treatment designed to protect newborns from a common respiratory virus, surged to €841 million, surpassing estimates of €648 million.

Meanwhile, sales of asthma drug Dupixent rose 16% to €3.46 billion but fell short of forecasts of €3.61 billion. The company attributed the miss to fewer business days in the quarter compared to previous periods.

Sanofi shares rose 0.5% in Paris trading.

Looking ahead, Sanofi expects sales growth in 2025 to reach a mid-to-high single-digit percentage when adjusted for currency fluctuations. The pharma giant anticipates only a modest increase in research and development spending next year compared to 2024, Roger said.

Jefferies analysts reiterated a Buy rating on Sanofi shares following the report.

They believe the company's outlook "suggests potential consensus EPS upgrades" and added that the buyback announcement "should be taken well" by investors.

Sanofi remains a top pick at Jefferies, with the investment bank highlighting "multiple immunology pipeline drugs readout Phase IIs over the next 12-18 months," which could "catapult the number of Phase III assets, with this improved visibility building belief in R&D thereby driving a long-awaited stock re-rating."

"We expect quarterly results to continue the beat-and-raise path for further upside," analysts led by Peter Welford added.