Monday, July 27, 2015

Seeking Alpha: Everything's Coming Up Roches

Given the hope and hype surrounding cancer immunotherapy/immuno-oncology (or IO), it almost seems anticlimactic when a Big Pharma company talks about earnings or drugs outside of the IO space. Roche (OTCQX:RHHBY) posted good results for the first half of 2015 and the company has recently reported some very encouraging data from drugs outside its core oncology franchise - a welcome respite from what had been a litany of failure that left the company's pipeline overly dependent upon oncology.

Roche doesn't look remarkably cheap right now, but there's a lot of uncertainty in some important value drivers. Depending upon what happens with pivotal studies, the oncology markets that Roche is targeting with its anti-PD-L1 antibody atezolizumab could be worth twice as much as I currently expect, though there will most definitely be fierce competition from Bristol-Myers (NYSE:BMY), Merck (NYSE:MRK), AstraZeneca (NYSE:AZN), and others. A more bullish assessment of the size of these end-markets in 2025 could take my target above $40, but I'm content to own Roche on the expectation of high single-digit to low double-digit annual returns.

Read more here:
Everything's Coming Up Roches

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