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Roche Holding AG ROG

Morningstar Rating
CHF 230.40 −1.70 (0.73%)
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Company Report

Roche Earnings: Shares Undervalued as We See Firm Turning a Corner on Growth and Productivity

We don’t expect to make any changes to our CHF 379/$55 fair value estimate for Roche following the company's first-quarter results. Roche’s pharmaceutical and diagnostics divisions each grew at a 2% rate at constant currency, with 7% underlying constant-currency growth after removing the headwind from reduced covid-related antibody and diagnostic sales. Management maintained its guidance for mid-single-digit constant-currency sales growth and core earnings per share growth for the full year. We expect covid and foreign-exchange headwinds to subside for the remainder of the year, allowing Roche’s underlying growth to become more apparent to investors. While this is not a year for significant new launches, we expect significant pipeline data amid a pipeline reshuffling that prioritizes higher-impact programs in immunology (Roivant’s TL1A) and obesity (Carmot’s CT-388). Beyond 2024, we think Roche is capable of mid- or even high-single-digit annual growth (and core operating margins remaining in the mid-30s), with higher growth possible if these in-licensed programs—or in-house programs like Alzheimer’s drug candidate trontinemab or oncology drug candidate tiragolumab—reach the market. We think Roche’s pharmaceutical innovation and diagnostics dominance support a wide moat.

Price vs Fair Value

ROG is trading at a 15% premium.
Price
CHF 230.40
Fair Value
CHF 591.00
Uncertainty
Low
1-Star Price
CHF 916.21
5-Star Price
CHF 568.80
Economic Moat
Yqj
Capital Allocation
Lcbfzpvgc

Bulls Say, Bears Say

Bulls

Roche and its innovative U.S. arm Genentech have a solid history of generating blockbuster therapies in oncology, and Roche's pipeline is full of novel candidates, with a particularly large late-stage pipeline.

Bears

Roche's immuno-oncology drug Tecentriq was launched third to market behind Bristol's Opdivo and Merck's Keytruda, raising questions about Roche's innovation.

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News

Trading Information

Previous Close Price
CHF 232.10
Day Range
CHF 230.10232.50
52-Week Range
CHF 212.90293.55
Bid/Ask
CHF 0.00 / CHF 0.00
Market Cap
CHF 183.68 Bil
Volume/Avg
1.0 Mil / 1.5 Mil

Key Statistics

Price/Earnings (Normalized)
11.85
Price/Sales
3.09
Dividend Yield (Trailing)
4.17%
Dividend Yield (Forward)
4.17%
Total Yield
4.17%

Company Profile

Roche is a Swiss biopharmaceutical and diagnostic company. The firm's bestselling pharmaceutical products include a variety of oncology therapies from acquired partner Genentech, and its diagnostics group was bolstered by the acquisition of Ventana in 2008. Oncology products account for 50% of pharmaceutical sales, and centralized and point-of-care diagnostics for more than half of diagnostic-related sales.
Sector
Healthcare
Industry
Drug Manufacturers - General
Stock Style Box
Large Value
Total Number of Employees
103,605

Competitors

Valuation

Metric
ROG
MRK
ABBV
Price/Earnings (Normalized)
11.8559.6714.44
Price/Book Value
6.318.1334.90
Price/Sales
3.095.375.16
Price/Cash Flow
11.3618.8814.92
Price/Earnings
ROG
MRK
ABBV

Financial Strength

Metric
ROG
MRK
ABBV
Quick Ratio
0.990.680.72
Current Ratio
1.351.250.94
Interest Coverage
14.933.973.95
Quick Ratio
ROG
MRK
ABBV

Profitability

Metric
ROG
MRK
ABBV
Return on Assets (Normalized)
17.03%5.22%14.14%
Return on Equity (Normalized)
53.42%13.56%172.29%
Return on Invested Capital (Normalized)
26.30%8.29%27.87%
Return on Assets
ROG
MRK
ABBV
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