Sanofi upgraded to “overweight” as Morgan Stanley sees €2 bln amlitelimab boost

Morgan Stanley upgraded Sanofi (SASY) to “overweight” with a €100 price target, citing increased clarity on amlitelimab's trial results, which, despite not surpassing Dupixent in efficacy, demonstrated consistent benefits and a potential ~€2 billion+ peak revenue opportunity. The upgrade is further supported by expectations of an 8% compound annual earnings growth through 2028, operating margin expansion to 29.6% by 2026 driven by strong Amvuttra royalties, and an attractive valuation at a 32% discount to large-cap European pharmaceutical peers, presenting a compelling entry point following the resolution of perceived overhangs.

Analysis

Morgan Stanley has upgraded Sanofi to “overweight” with a €100 price target, primarily driven by reduced uncertainty surrounding its atopic dermatitis drug, amlitelimab. Trial results for the OX40L antibody, described as a “clearing event,” showed consistent benefits on key endpoints, and while not superior to Dupixent in efficacy, the drug offers advantages in dosing and durability. Analysts now see a path to a peak revenue opportunity of approximately €2 billion or more, with further upside contingent on long-term data from the OCEANA program due in 2026. This pipeline clarity underpins a renewed earnings outlook, with Morgan Stanley forecasting an 8% compound annual earnings growth for Sanofi from 2025 to 2028, outpacing the 7% average for peers. Operating margins are projected to expand to 29.6% by 2026, bolstered by sales momentum and a stronger-than-expected, albeit potentially short-lived, royalty stream from Alnylam's Amvuttra, which could peak at €1.8 billion. The upgrade is also a valuation call, as Sanofi trades at a significant discount of approximately 32% to its large-cap European pharmaceutical peers, based on a 10x multiple of 2025 estimated earnings, presenting what the brokerage views as an attractive entry point.

Key Decisions for Investors

• Investors should consider the current valuation as an attractive entry point, as the resolution of the amlitelimab overhang, combined with a projected 8% earnings CAGR and a ~32% discount to peers, presents a compelling risk/reward profile.
• Monitor future clinical trial data for amlitelimab, specifically the OCEANA program results expected in 2026, as confirmation of long-term advantages over Dupixent is critical for unlocking revenue upside beyond the current ~€2 billion forecast.
• Factor in the near-term nature of the Amvuttra royalty tailwind when assessing margin sustainability, as its potentially short-lived contribution means long-term profit growth will depend more heavily on core sales momentum.