Sanofi (NASDAQ: SNY) (EPA: SAN) shares fell 17% after the results were announced. These results are good enough and in line with realistic expectations. The same is true for guidance for the remainder of the current fiscal year (2023). You know, it’s not terribly exciting, but it’s good enough and as expected. The reason for the decline is lower performance forecast for fiscal 2024.
For those who don’t know, Sanofi’s business is: “Sanofi is a healthcare company engaged in the research, development, manufacturing and marketing of therapeutic solutions in the United States, Europe and internationally. It operates through pharmaceutical, The Vaccines and Consumer Healthcare segment operates. The company provides specialty care such as dupixent, neurology and immunology, rare diseases, oncology and rare blood disorders; medicines to treat diabetes and cardiovascular disease; and established prescription products. In addition , which also offers pediatric vaccines for polio, whooping cough and Hib; influenza, booster, meningitis, travel and endemic vaccines, including hepatitis A, typhoid, cholera, yellow fever and rabies .” As we can imagine, given recent events including the COVID-19 vaccine.
Sanofi stock price from Google Finance
As we said, this year’s results were fair enough and at least in line with expectations. The trouble came late: “Sanofi shares tumbled as a surprise forecast for lower profits next year overshadowed optimism about plans to spin off its consumer health unit. The stock fell as much as 16% in Paris trading, hitting a record high, with Sanofi 19.5 billion euros ($20.6 billion) was wiped off the market value of the Philippines. The drugmaker warned that increased investment in research and development and changes in tax rates will lead to earnings in 2024 falling from 2023 levels.” Reuters seems to have got the year wrong, but maybe They were right after all: “Sanofi shares plunged on Friday, wiping 20 billion euros ($21 billion) from its market value after the company abandoned its 2025 profit target as part of a planned IPO. The consumer healthcare business is focused on its core innovative medicines business. “Sanofi is reviewing potential spin-off options but believes the most likely route is through a capital markets transaction creating a listed entity headquartered in France,” the French drugmaker said in a statement. “
Here’s something to remind us of ourselves. What matters to stock prices is the net present value of future earnings. Therefore, what matters is what is to come, not what has already happened. This year’s results are only meaningful insofar as they guide our future results. And, obviously, cuts to future earnings will hurt the current share price.