Shares of healthcare company Sanofi (SNY) (GB:0A2V) are down ~7% today after its trial of breast cancer treatment amcenestrant resulted in a failure. Despite this, analysts remain bullish on the stock, seeing solid upside potential.
Amcenestrant is an oral selective estrogen receptor degrader (SERD) and was being evaluated in a phase 3 trial for advanced breast cancer. Sanofi is now discontinuing the global clinical development of the drug after an independent data monitoring committee concluded that the drug, in combination with palbociclib, could not meet the required criteria and recommended stopping the trial.
The Global Head of Research and Development at Sanofi, John Reed, MD, Ph.D., commented, “While we are disappointed by this outcome, our research will further the scientific understanding of endocrine therapies in people with breast cancer…Oncology remains a priority area for Sanofi, and we will continue to pursue transformative research to develop new medicines for people living with cancer.”
While the discontinuation of amcenestrant is a setback, Sanofi continues to advance its pipeline. Last week, the company and the National Institute for Health and Care Research (NIHR) enrolled the first patient in its Hospitalised RSV Monoclonal Antibody Prevention (HARMONIE) study.
This study is evaluating nirsevimab against the respiratory syncytial virus (RSV) in infants. Globally, RSV affects 90% of children before they turn two. Impressively, HARMONIE aims to enroll over 20,000 children by March 2023 across three countries.
Is Sanofi a Good Stock to Buy?
Despite this clinical setback, the Street has a Moderate Buy consensus rating on the stock alongside an average price target of $93.44. This implies 124.6% upside potential for the stock.
Along with the Street, investors too remain gung-ho about Sanofi, and our data at TipRanks shows that the number of top investor portfolios on TipRanks holding Sanofi increased by 24.8% over the past 30 days alone.
Hedge funds, on the other hand, are yet to share this enthusiasm and have decreased holdings in Sanofi by 16.5 million shares in the last quarter. This implies a negative hedge fund confidence signal in the stock.
Conclusion: Sanofi Stock Seems Attractive
The long-term growth story for Sanofi remains intact. A TipRanks Smart Score of 7 out of 10, a price-to-sales ratio of 2.4x, and a price-to-cash-flow ratio of 10.3x imply that the stock is attractively priced at current levels and could outperform the market in the coming periods.
