NEW YORK - An HSBC analyst upgraded Sanofi-Aventis SA Wednesday,Rimonabant brand citing the French drug maker’s full pipeline and shrugging off its failure to receive U.S. approval for the weight-loss drug Acomplia.In late June, Sanofi-Aventis (nyse: SNY - news - people ) withdrew its application to gain U.S. approval for Acomplia, following a meeting in which government advisers rejected the treatment on safety grounds. The Paris-based company said it would resubmit its Food and Drug Administration application for Acomplia at a later date.Despite the Acomplia issues, HSBC (nyse: HBC - news - people ) analyst Kevin Scotcher on Wednesday raised his rating on Sanofi shares to “Overweight” or “Buy” from “Neutral,” citing the company’s new drug portfolio.”Given the share price decline post the failure to commercialise Acomplia in the U.S. in 2007, we nonetheless point out that Sanofi has numerically the fullest pipeline among the 11 U.S. and European drug majors under our coverage,” Scotcher wrote in a note to investors.

HSBC did lower its price target on the shares to 71 euros ($98) from 72.50 euros, however. The analyst pointed to risks including the possibility that Sanofi could launch a highly leveraged takeover of American rival Bristol-Myers Squibb Co. (nyse: BMY - news - people )

Aug. 1 (Bloomberg) — Sanofi-Aventis SA, Europe’s second- biggest drugmaker, reported profit that missed analysts’ estimates on reduced sales of its Ambien sleeping pill and announced a 3 billion-euro ($4.1 billion) share buyback.

Profit excluding takeover costs and writedowns declined 6.1 percent to 1.68 billion euros, or 1.24 euros a share, in the second quarter, down from 1.79 billion euros, or 1.33 euros, a year earlier, the Paris-based company said today. Sanofi was expected to earn 1.79 billion euros in a Bloomberg survey. The shares fell to their lowest level in more than two years.

Generic competition and a dearth of new products Rimonabant brand name caused profit to drop for a fourth quarter. Ambien sales fell 42 percent. Sanofi, which counted on the weight-loss drug Acomplia to boost growth, had to withdraw the U.S. application for the medicine last month after an expert panel linked it to suicide and depression.

“It’s not a good day for Sanofi,” said Paul Diggle, an analyst at Nomura Code Securities in London. “Share buyback or no share buyback, Sanofi is the least of the five European majors I’d be interested in having.”

Sales fell 2 percent to 6.94 billion euros last quarter, while operating profit declined 5 percent to 2.33 billion euros. Consolidated net income was 1.13 billion euros, the company said. The share repurchase will be done before mid-May, Sanofi said.

Sanofi’s stock dropped 2.06 euros,rimonabant availability or 3.4 percent, to 59.44 euros in Paris. Shares of the French drugmaker have fallen 12 percent since a Food and Drug Administration panel rejected Acomplia on June 13. Sanofi plans to provide an update on drug development projects on Sept. 17 in Paris.Unless they can convince people about their pipeline at the R&D day in September, it will be difficult to get people excited, Diggle said.

`Difficult Year’Sanofi repeated its full-year outlook, saying adjusted earnings per share will probably grow 9 percent. The forecast is based on a euro-dollar exchange rate of $1.25. Based on the average euro-dollar exchange rate for the first half of the year of $1.33, Sanofi’s goal would translate into a 4.3 percent gain.

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