Roche (OTCQX:RHHBY) has gone basically nowhere over the last three months, continuing a lingering trend of underperformance relative to Bristol-Myers (NYSE:BMY), Merck (NYSE:MRK), and AstraZeneca (NYSE:AZN) over the past year. Nothing has gone dramatically wrong for Roche, but concerns over biosimilars weigh much more heavily on Roche than on Bristol-Myers or Merck and the company is only just getting its toe in the water with immuno-oncology drugs.
The shares continue to look like a good, but not great, investment candidate. Roche has had some recent success in its non-oncology pipeline, but there's more work to do and a real concern for some investors that the company will suffer a "growth gap" in the time where biosimilar competition to Avastin, Herceptin, and Rituxan chews into revenue ahead of expected ramps of new drugs in oncology, hematology, and autoimmune disease. I believe there's alpha to be generated buying Roche in the low $30s (or below) and selling in the high $30s, but it will be some time yet before Roche can really break out of this dull stretch.
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Despite Incremental News, Roche Still Largely In A Holding Pattern