Roche Knocked Back A Bit Ahead Of A Year Of Important Read-Outs

 

Shares of Swiss pharma giant Roche (OTCQX:RHHBY) (OTCQX:RHHBF) had been weak going into earnings, and a 2H/Q4’21 earnings report that included some notable margin shortfalls certainly didn’t help matters, and neither did guidance that suggested only low-single-digit growth prospects in the near term. With that, shares of the ADRs are down about 5% since my last update, modestly underperforming the global large-cap pharma space.

I’m not that troubled by near-term margin challenges, nor the revenue headwinds that declining COVID-related sales will create in 2022. I’m far more interested in Roche’s clinical trial read-outs in 2022, including key compounds for cancer and Alzheimer’s disease, and I’m likewise more interested to see whether the erosion of sales to biosimilars continues to slow and how the diagnostics space builds off of the momentum/leverage created by the pandemic (including getting more testing systems into more labs).

At this point, I’d call Roche’s valuation “okay” more than compelling, and I’m fine with that … it’s not all that often that a company of Roche’s quality gets especially cheap, and I think a long-term annualized return in the high-single-digits, with upside tied to clinical trial data, still makes for a compelling investment thesis.

 

Read the full article here: 

Roche Knocked Back A Bit Ahead Of A Year Of Important Read-Outs