Roche Needs Some Wins

Swiss drug giant Roche (OTCQX:RHHBY) has long enjoyed a strong reputation, but reputations can sometimes outrun or outlast the underlying facts, and I'm getting more concerned that that may be the case here. While Roche has a huge presence in oncology and has done well for itself in newer markets like multiple sclerosis and hemophilia, the reality is that the company's long-term stock performance has lagged its peer group and the company hasn't been able to consistently generate strong economic returns from its large R&D budget.

Roche could really use some meaningful clinical wins now. This was a year of significant clinical read-outs, and thus far Roche doesn't really have any big wins. Not only does that hurt the revenue outlook, but it also saps confidence and sentiment. Valuation isn't really compelling in either direction right now; while I expect many will continue to defend Roche as a long-term buy-and-hold core holding, I think the incoming new CEO may want to think about some internal restructuring with an eye toward generating better long-term returns.

 

To continue reading the article, please follow this link: 

Roche Needs Some Wins