What Recent Data Suggests About Sanofi’s Value After 6% Share Price Rise

If you are on the fence about what to do with Sanofi stock, you are certainly not alone. Investors have been watching closely as Sanofi navigates market headwinds and shifting industry sentiment, all while showing signs of underlying resilience. Over the past month, Sanofi shares have edged up about 6%, even as the stock is still catching up from a tough spring that left it down over 7% year-to-date. Longer-term, the five-year total return sits at a solid 23.7%, a testament to Sanofi’s staying power and perhaps its untapped potential.

What is catching even more attention now is Sanofi’s current valuation. The stock is trading at a notable discount to both analysts’ price targets and intrinsic value. Right now, shares are sitting about 24% below the consensus target and 51% below intrinsic fair value by discounted cash flow analysis. It is rare for a blue-chip pharmaceutical company to look quite this inexpensive, and with steady annual gains in both revenue and net income, there is an argument to be made that the market is overlooking something important here.

For investors who focus on numbers, Sanofi passes 6 out of 6 major undervaluation checks, earning a perfect value score of 6. But how are these valuation scores tallied, and do they really tell the full story for a company like Sanofi? Next, let’s break down exactly how this value score is built and which metrics matter most. Later, you will find an even more insightful way to consider Sanofi’s real value in your portfolio.

Sanofi delivered -7.8% returns over the last year. See how this stacks up to the rest of the Pharmaceuticals industry.

Approach 1: Sanofi Cash Flows

A Discounted Cash Flow (DCF) model aims to estimate a company's intrinsic value by projecting its future cash flows and then discounting those projected amounts back to their present value. This provides a snapshot of how much the business is worth today, based solely on its capacity to generate future cash.

Sanofi’s latest twelve months Free Cash Flow stands at €8.17 billion. Looking ahead, analysts expect Sanofi’s annual cash flows to see steady growth, with projections reaching approximately €10.55 billion by 2035. Over the next decade, this consistently rising cash stream forms the basis for an intrinsic valuation that is well above the current share price.

According to the DCF calculation, Sanofi’s intrinsic fair value is estimated at €178.55 per share. Since the current market price is roughly 51.0% below this number, the stock appears significantly undervalued based on its long-term cash potential. For a blue-chip pharmaceutical firm, such a discount is rare and suggests a possible opportunity for long-term investors.

Result: UNDERVALUED

Our DCF analysis suggests Sanofi is undervalued by 51.0%. Track this in your watchlist or portfolio, or discover more undervalued stocks based on DCF analysis.

Approach 2: Sanofi Price vs Earnings

The Price-to-Earnings (PE) ratio is a widely used metric for valuing companies with stable and consistent profits. It is a suitable choice for profitable firms like Sanofi because it helps investors understand how much they are paying today for each euro of the company’s earnings. Growth expectations and business risk usually play important roles in determining what a “fair” PE ratio should look like. Fast-growing companies or those considered less risky often command higher multiples, while slower growth or increased risk can result in a lower ratio being seen as appropriate.

Sanofi currently trades at a PE ratio of 16.7x. This is noticeably lower than the pharmaceuticals industry average of 25.3x and is also below the average for its peers at 22.5x. In other words, the market is valuing Sanofi’s earnings at a significant discount compared to both the broader industry and its close competitors, even as the company continues to report reliable profits.

To add further context, Simply Wall St’s Fair Ratio for Sanofi is currently 40.8x. This proprietary metric is intended to reflect what a reasonable PE ratio would be for Sanofi based on factors such as its growth outlook, profitability, market cap, and risk profile. With Sanofi’s actual multiple less than half of that “fair” benchmark, the stock also appears materially undervalued on this measure.

Result: UNDERVALUED

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

Upgrade Your Decision Making: Choose your Sanofi Narrative

A Narrative is a simple and powerful way to capture your personal story about a company, connecting what you believe about Sanofi's future to your assumptions for its revenue, profit margins, and fair value.

Unlike traditional numbers or ratios alone, Narratives tie together the company’s business developments, your specific forecasts, and an estimate of fair value into one clear and evolving picture. On Simply Wall St, anyone can create or follow Narratives, making this more than just an analytical tool. It becomes a shared and accessible way to invest smarter alongside millions of other investors.

Narratives make it easy to decide when to buy or sell because they show your calculated Fair Value next to the actual share price. These insights are always up to date, automatically reflecting the latest news, earnings, or analyst changes that could affect your view.

For example, you might choose a bullish Narrative expecting Sanofi’s heavy R&D pipeline and portfolio refresh to drive long-term earnings, believing a fair value of €124.80 is realistic. Another investor might favor a more cautious Narrative with concerns about drug pricing pressure and estimate a lower fair value of €90.00. Narratives empower you to act confidently, based on your perspective, as the company’s own story continues to unfold.

Do you think there's more to the story for Sanofi? Create your own Narrative to let the Community know!

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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