We are maintaining our Neutral recommendation on
). The stock carries a Zacks #3 Rank (Hold) in the short run.
ALLERGAN INC (AGN): Free Stock Analysis
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SANOFI-AVENTIS (SNY): Free Stock Analysis
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Sanofi reported third quarter 2012 business earnings of $1.05 per
ADS, above the Zacks Consensus Estimate of 99 cents. However,
reported quarter earnings were much lower than the year-ago
earnings of $1.27 per ADS. Sanofi expects 2012 business earnings
to be 12% lower on a year-over-year basis at constant exchange
Several of Sanofi's products are facing generic competition. In
the third quarter of 2012, Eloxatin sales nose-dived 62.9% to
€129 million, due to generic competition in the US. The product
went off patent in the US on August 9, 2012. Plavix, Aprovel,
Taxotere, Lovenox and Xatral revenues are also being affected by
In order to address its patent concerns, Sanofi reviewed its cost
base and implemented a new operating model. The company conducted
an extensive review of its research and development operations in
order to reallocate resources to the highest growth and most
promising development programs. The new operating model should
help reduce significant R&D and SG&A costs. The company
remains on track to generate additional cost savings of €2
billion by 2015.
We are pleased with Sanofi's progress with its pipeline. Over the
last few months, several of Sanofi's pipeline candidates gained
approval including US approval of Aubagio for relapsing forms of
multiple sclerosis (RMS) and US approval of Zaltrap as a
combination therapy for treatment-experienced patients suffering
from metastatic colorectal cancer. New product launches should
make significant revenue contributions in the upcoming quarters.
Pharma stocks that currently look more attractive include
). All these companies carry a Zacks #2 Rank (Buy).