Sanofi: Significant miss to Q2 estimates and guidance cut for FY
BUY, Fair Value Under Review
This morning Sanofi reported Q2 numbers that Chris Viehbacher himself qualified as “a difficult quarter”. We are approaching this release cautiously and with worries that consensus was too high, not appreciating currency headwinds, continuous difficulties at Merial and a slow-down in emerging markets. But it is even worse than we anticipated. Obviously Brazil, where Medley is collapsing, is reason number 1 but, with the exception of Genzyme, all revenue lines disappointed whereas operating costs are in line or above expectations. In the end, Core EBIT is missing our estimate by EUR400m or 16%. With capital gains and a lower-than-expected tax rate, Core EPS comes short by “only” 11% to our EUR1.27 estimate but consensus was EUR1.31. Core EPS guidance is revised downwards from 0 to -5% to -7% to -10%. With at least a 5% negative currency impact, this means Core EPS should come in at around EUR5.30-5.35, i.e. a 5% cut to the current consensus.
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