No investor can ignore a crushing bottom-line beat and raised profitability guidance.
Investors traded on the latest news about global pharmaceutical company Sanofi (SNY 4.40%) Friday. Happily for existing shareholders, the news — of its third-quarter results — was encouraging, and the stock rose as the trading week came to a close. It climbed more than 4%, sharply contrasting the basically flat-lining S&P 500 index.
Crushed bottom-line consensus
One reason investors were impressed by Sanofi’s latest fundamentals was the company’s sales growth for the period. It came in at over 12% year over year, according to International Financial Reporting Standards (IFRS), to land at 13.4 billion euros ($14.5 billion).
Net income rose at roughly the same percentage rate to 2.8 billion euros ($3 billion), or 2.25 euros ($2.43) per share. Meanwhile, its “business” (i.e., non-IFRS or adjusted) net income was 12% higher at nearly 3.6 billion euros ($3.9 billion), translating to 2.86 euros ($3.09 ) per share.
That meant a mixed quarter for Sanofi. While analysts tracking the stock were collectively modeling a notably higher sales figure of almost 14.3 billion euros ($15.4 billion), they very much underestimated profitability with their 1.37 euro ($1.48) per share forecast under IFRS guidelines.
Sanofi attributed its double-digit growth to growth in vaccines, particularly its latest flu jab. Another major revenue contributor was Dupixent, the company’s COPD treatment, whose sales surged 24% year over year to almost 3.5 billion euros ($3.8 billion).
Profitability guidance bumped higher
In the earnings release, Sanofi upgraded its full-year 2024 business net income guidance. It now expects that line item to post growth at a low-single-digit percentage rate over the 2023 result, likely a key reason investors reacted so positively to the company’s news.
Sanofi’s future looks good, with plenty of sales generators to keep the fundamentals rising. It will be worth watching Dupixent’s trajectory, as it has had quite an impact on both the market and the fortunes of its developer.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
