Sanofi’s Earnings Steady but Lacking Catalysts—Maintaining Neutral Rating

Overview

JPMorgan released its commentary on Sanofi’s Q1 2026 earnings report. Although the company’s earnings outlook for 2026 and 2027 is strongly supported by its core product Dupixent, the institution maintains a ‘neutral’ rating on Sanofi due to the lack of blockbuster pipeline news in 2026 that could substantially improve long-term growth expectations beyond the ‘post-Dupixent era.’ The report slightly lowered revenue and earnings forecasts for 2026-2030, yet still expects the company to maintain steady double-digit earnings per share growth. Market focus has now shifted to the new CEO Belen Garijo’s strategic vision and business development priorities.

Core views

Earnings Forecast and Adjustments: Based on Q1 results, JPMorgan made minor adjustments of less than 1% to its sales forecasts for 2026-2030, but reduced its forecasts for business operating income (BOI) and business earnings per share (EPS) by about 2% for the same period. Currently, its 2026 business EPS forecast (€8.43) is about 1% lower than market consensus, while the 2027 forecast (€9.05) is largely in line with consensus. The institution expects Sanofi to continue achieving 7% constant currency (CER) growth in business EPS in 2027, accompanied by slight margin expansion. Core Driver Analysis: Growth in 2026 relies mainly on the flagship drug Dupixent, whose sales are expected to grow at a CER rate of 17%. In addition, the consolidation of Ayvakit contributed about 1 percentage point to earnings, and the vaccine segment maintained stable overall sales. Among them, Dynavax’s contribution (accounting for 4 percentage points of top-line vaccine sales) offset the weak performance of influenza vaccines (expected to decline by 9% in local currencies) and Beyfortus (expected to grow by 1% in local currencies, including a 30% decline in the U.S. market). First-half sales are expected to grow by 12%, slowing to 5% in the second half, mainly affected by moderating Dupixent growth and weakening consolidation effects. Strategic Focus: As short-term financial data becomes clearer, market attention is shifting to the new CEO Belen Garijo’s strategic plans. Investors are closely watching the latest developments in her alliance with Regeneron, as well as her business development priorities in key therapeutic areas such as immunology, rare diseases, and vaccines. Since there are no pipeline catalysts in 2026 that could substantially alter the long-term growth trajectory, the institution believes that upside potential for the stock is limited.

Analysis framework

JPMorgan used the Sum-of-the-Parts (SOTP) valuation method combined with a price-to-earnings (P/E) multiple to derive the target price. First, based on 2027 projections, it valued Sanofi’s core pharmaceutical business and its consumer health subsidiary Opella (holding 47.8%), which is slated for sale, separately. The core business was valued using an EV/EBITDA multiple, while Opella’s equity value was calculated independently. Finally, the two equity values were added together to obtain the group’s total equity value, which was then divided by the total number of shares outstanding to arrive at the target price per share. At the same time, by comparing with market consensus data, the relative position and risk premium of the forecast were assessed.

Methodology notes

• Valuation MethodSOTP Sum-of-the-Parts Valuation

  Sum-of-the-Parts Valuation Method

  This method values different business segments of a company (such as the core pharmaceutical business and the consumer health subsidiary Opella, which is to be sold) separately and then adds up their values to get the company’s overall value. It is suitable for companies with diversified businesses or significant asset restructuring and can more accurately reflect the true value of each part.

• Industry/Industrial Analysis FrameworkSales and Volume Decomposition

  Decomposing Sales Growth Drivers

  Breaking down sales growth into contributions from different products (such as Dupixent and Beyfortus) and exchange rate impacts (CER vs LC). This helps identify real growth engines (such as Dupixent’s 17% high growth) and drag factors (such as the decline in influenza vaccines), thus judging the sustainability of growth.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Sanofi (SASY.PA)

  Core covered stock, benefiting from continued volume growth of Dupixent

  Strengths

  Strong Dupixent growth, high visibility of earnings for 2026-2027; abundant cash flow, stable dividend yield (around 5.4%-5.6%)

  Weaknesses

  Growth story after Dupixent remains unclear; traditional products like influenza vaccines face pressure; the new CEO’s strategy is still in the adjustment phase

  Comparison

  Compared to peers, earnings growth is steady but lacks explosive pipeline catalysts

  Risks

  Slowing uptake or sales growth of Dupixent; execution of the new CEO’s strategy falling short of expectations

Key data

• 2026E Business EPS€8.43Downgraded by 0.8% from previous forecast, about 1% below market consensus
• 2027E Business EPS€9.05Basically in line with market consensus, expected to achieve 7% CER growth
• 2026E Sales Growth Rate8.5% (CER)Mainly driven by Dupixent, 12% in the first half, 5% in the second half
• Target Price€95.00Based on approximately 10x PE for 2027, including Opella equity value
• Dupixent 2026E Growth Rate17% (CER)The core growth driver

Impact & implications

The report believes that Sanofi’s earnings are highly certain in the short term thanks to Dupixent’s strong performance and cost control, providing bottom support for the stock price. However, due to the lack of new blockbuster pipeline data or clear details on M&A strategies, the market finds it difficult to assign higher valuation multiples. The clarity of the new CEO’s strategy will be the key to breaking through the current stock price. For investors, the current price reflects reasonable earnings expectations, but lacks upward surprise catalysts, making it suitable for holding rather than aggressive buying.

Risks

• If Dupixent’s market penetration or sales growth slows down, EPS growth may lag behind industry averages, leading to compression of valuation multiples
• If transactions or business developments led by the new CEO fail to resonate well with the market or fail to meet cost-saving targets, investor confidence could be hit and valuations could come under pressure

What to watch

• Further updates from the new CEO Belen Garijo on Sanofi’s strategic outlook
• Latest developments in the alliance with Regeneron and potential asset incorporations
• Business development (BD) priorities and potential deals in the fields of immunology, rare diseases, and vaccines
• Trends in Dupixent sales growth in the second half of 2026