Does the Market Reaction to Sanofi’s Pipeline Shift Create an Opportunity in 2025?

• If you are wondering whether Sanofi is quietly turning into a bargain while everyone is focused on flashier names, this deep dive will help you assess whether the current price reflects its long term potential.
• Despite a solid 5 year gain of 28.1%, the stock is down 12.7% year to date and 4.6% over the last month, suggesting that sentiment has cooled even as the long term story remains intact.
• Recently, markets have been reacting to Sanofi's strategic shifts in its pharmaceutical pipeline and ongoing investments in innovative therapies, developments that can change how investors view its long term growth profile. At the same time, regulatory and competitive changes in key franchises have added a layer of uncertainty that may be contributing to short term price weakness.
• Interestingly, Sanofi currently scores a 6/6 valuation check, indicating that it screens as undervalued across all of our metrics. Next, we will unpack those methods before finishing with an even more intuitive way to think about what the stock may be worth.

Find out why Sanofi's -5.8% return over the last year is lagging behind its peers.

Approach 1: Sanofi Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a business is worth today by projecting its future cash flows and then discounting those back to their value in the present.

For Sanofi, the model starts from last twelve month free cash flow of about €8.1 billion and uses analyst forecasts for the next few years, then extends those trends further into the future. By 2029, free cash flow is projected to reach roughly €12.9 billion, with additional growth extrapolated out to 2035 using a 2 stage Free Cash Flow to Equity framework developed by Simply Wall St.

When all those future cash flows are discounted back to today, the model arrives at an intrinsic value of about €279 per share. Compared with the current market price, this implies Sanofi is trading at roughly a 70.5% discount to its estimated fair value. This suggests investors are paying far less than what the cash flows imply the business is worth.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Sanofi is undervalued by 70.5%. Track this in your watchlist or portfolio, or discover 914 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Sanofi.

Approach 2: Sanofi Price vs Earnings

For a profitable, established business like Sanofi, the price to earnings (PE) ratio is a practical way to gauge whether investors are paying a reasonable price for each euro of current profits. In general, companies with stronger, more durable growth and lower perceived risk can justify a higher PE ratio, while slower growth or higher uncertainty usually warrant a lower multiple.

Sanofi currently trades at about 15.6x earnings, which sits well below both the Pharmaceuticals industry average of roughly 22.4x and the peer average of around 21.8x. On the surface, that discount might suggest the market is being cautious about Sanofi’s outlook. However, Simply Wall St’s Fair Ratio offers a more tailored benchmark.

The Fair Ratio of 23.4x is Simply Wall St’s proprietary estimate of the multiple Sanofi should trade on, given its earnings growth profile, profitability, industry, market cap and specific risk factors. Because it blends these company level characteristics, it is more informative than a simple comparison with broad industry or peer averages. With the Fair Ratio of 23.4x sitting well above the current 15.6x, Sanofi screens as meaningfully undervalued on this earnings based lens.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1463 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Sanofi Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, a simple framework on Simply Wall St’s Community page that lets you turn your view of Sanofi’s future revenues, earnings and margins into a coherent story. You can then link that story to a financial forecast and Fair Value, and compare that Fair Value to today’s share price to inform your decision on when to buy or sell. The numbers update dynamically as new news or earnings arrive, and there is room for very different perspectives. For example, one Sanofi Narrative might focus on strong biologics leadership, successful late stage R and D, and stable pricing to support a Fair Value near €125. A more cautious Narrative could emphasize pipeline risk, pricing pressure and tougher competition to justify something closer to €92, all using the same easy, visual toolkit.

Do you think there's more to the story for Sanofi? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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