Undervalued Sanofi Posts Steady Q4 With Strong Dupixent Sales Offsetting Mature Drug Declines

Sanofi reported fourth-quarter results and issued 2023 guidance largely in line with our expectations, and we don’t expect any major fair value estimate changes based on the update. We continue to view the stock as undervalued, with the market not fully appreciating the firm’s ability to drive cash flows from immunology drug Dupixent and redeploy the gains toward successful new drug development. While the Dupixent sales gains (up 42% to EUR 2.4 billion) were impressive, the ability to drive successful drug development has been less robust recently. Nevertheless, with patent protection on Dupixent for almost another decade, we believe Sanofi will have increasing success with its earlier-stage drug pipeline, partly based on a shift toward more innovative drugs, reinforcing the firm’s wide moat.