Roche Shares Remain Undervalued Following the Largely Expected Gantenerumab Failure

Roche’s Alzheimer’s disease drug candidate gantenerumab has failed to slow cognitive decline in two large phase 3 studies, and while we expect to see more details at a presentation on Nov. 30, we’ve removed the drug from our valuation model. We’ve slightly adjusted our fair value estimates for Roche shares to CHF 428/$57 from CHF 433/$55, which also incorporates recent foreign exchange volatility, and we think Roche shares remain significantly undervalued. Despite gantenerumab’s failure, we remain bullish on Roche’s established portfolio and strong pipeline in oncology, as well as continued solid growth prospects for other key drugs in immunology and hematology, supporting its wide economic moat.