Roche Showing Its Operating Strength Isn't Just A Fluke

With six straight quarters of revenue beats in the drug business (and a longer streak overall), I don't think you can call Roche's (OTCQX:RHHBY) operating performance a "fluke", though it is still fair to note that those beats are coming against lowered expectations that factor in greater biosimilar competition and weaker-than-once-expected sales for newer drugs like Tecentriq. Even so, drugs like Ocrevus and Hemlibra are doing well, and even former "disappointments" like Perjeta and Tecentriq are contributing more than expected, while the company continues to manage the biosimilar threat to its three largest drugs.

Roche still has a comparatively modest outlook for EPS growth over the next five years, and that does restrain valuation, but Roche has a deep pipeline with a lot of home run shots that don't factor significantly in most analysts' models. While the odds are slim that any one candidate will make it, collectively there could still be upside from the pipeline and the shares seem modestly undervalued below the mid-$30s.

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Roche Showing Its Operating Strength Isn't Just A Fluke

Roche Still Offers A Respectable Return As Bulls And Bears Slug It Out

I have long found Swiss drug and diagnostics giant Roche (OTCQX:RHHBY) to be a Rorschach test for the market, sell-side analysts, and myself. Given the huge number of moving parts, including significant biosimilar risk, a new generation of differentiated drugs, and a deep pipeline, there’s always news – good and bad – to drive shifts in the game of tug-of-war between bulls and bears.

Although Roche is by no means the end-all be-all in the pharmaceutical space, I believe it remains a credible core holding for those investors who don’t want to take on the risk of betting on more transformative stories (whether that’s pipeline-driven, M&A-driven, or restructuring-driven) or more speculative biotech ideas. I view Roche as more or less reasonably-valued today, but I believe “reasonable” in this case still leaves the prospect of the compounding of high single-digit returns over the long term.

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Roche Still Offers A Respectable Return As Bulls And Bears Slug It Out

Roche Reports Positive Clinical Results, But The Market Is Unimpressed

Roche's (OTCQX:RHHBY) plans to leverage Tecentriq as its next cancer blockbuster and offset steep looming biosimilar sales erosion have been looking shakier and shakier as the company continues to post okay-but-great data from multiple trials, while chief rival Merck (MRK) continues to post strong Keytruda data. While two recent positive trial read-outs on Tecentriq in lung cancer and breast cancer are certainly welcome, they're not likely going to change the tide of sentiment, and management has work to do to convince the Street it's not an also-ran in the making.

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Roche Reports Positive Clinical Results, But The Market Is Unimpressed

Roche Drifting Without Perception-Changing Data

Once tapped as the future belle of the ball due to its deep pipeline of potential add-on/combo oncology therapies, Roche (OTCQX:RHHBY) has continued to lag rivals like Merck (MRK) as investors grow more concerned that Roche's PD-L1 antibody Tecentriq will have trouble standing out from the crowd and become yet another disappointing offset to looming biosimilar erosion.

It's still early (a familiar fallback position for disappointed bulls), but Roche really needs strong data to close the gap with Merck's Keytruda, even if it is at least in part a perception gap. Roche could also really use another blockbuster or two from its pipeline, particularly one that doesn't have abundant competition. Although I continue to believe that the market is not giving Roche its due, the reality, for now, is that looming biosimilar-driven revenue erosion is a hard cloud for Roche to get out from under and it is likely to take time for perceptions to shift.

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Roche Drifting Without Perception-Changing Data

Roche Drifting Ahead Of Key Data

Things aren't as dire at Roche (OTCQX:RHHBY) as the market may have you believe, but the reality is the company needs to deliver strong clinical data from multiple upcoming late-stage trials. Generics are coming after key drugs that contribute close to 40% of the company's total revenue, and investors need a reason to believe again that Roche can continue to generate worthwhile growth as these veteran contributors start to diminish.

I'm still more or less bullish on the Tecentriq opportunity at Roche, and I believe the company has made more progress with its pipeline than is reflected in the share price. The company definitely needs these upcoming trial read-outs to go well, but I believe the share price undervalues what I believe will be long-term mid-single-digit free cash flow growth.

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Roche Drifting Ahead Of Key Data

Roche Delivers Some Clinical Wins, But Skepticism Remains Largely Intact

Even though Swiss drug giant Roche (OTCQX:RHHBY) has managed to deliver a series of largely better-than-expected clinical trial results, you wouldn’t really know it from the share price. Despite a lot of skepticism going into the IMPower 150 read-out for Tecentriq in first-line lung cancer, Roche’s successful result seems to not to have done much to resolve questions and concerns about how it will stack up with rivals like Merck’s (MRK) Keytruda. So too with the very positive results from the HAVEN 3 study of Hemlibra.

As IMPower 150 was only the first, and arguably the riskiest, of five front-line Tecentriq trials in lung cancer, I think Roche is in a good position going into further read-outs in 2018. Likewise, I believe Roche has a long-term winner with Hemlibra even as gene therapy approaches look to gain meaningful share in the hemophilia space. At a minimum, then, I would argue that Roche has established three strong new drug platforms (Tecentriq, Hemlibra, Ocrevus) with blockbuster potential on top of a very robust R&D pipeline.

I believe Roche is undervalued up into the mid-$30s. Competition from biosimilars is going to do its damage to near-term reported financial results, but the market has known about this for some time. With Roche having, at least in my opinion, reestablished credibility that it can develop meaningful new therapeutics, I believe the shares are undervalued today on the basis of both its existing business and the potential pipeline contributions over the next decade.

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Roche Delivers Some Clinical Wins, But Skepticism Remains Largely Intact

A Year Later, It's Still 'Hurry Up And Wait' For Roche

I try not to spend too much of my writing time on well-known, well-covered names like Roche (OTCQX:RHHBY), but I do own the shares and it has been a year to the day since I've last written on this giant Swiss pharmaceutical company.

I thought the company was more or less in a holding pattern a year ago, and the shares have gone almost nowhere (on a net basis) since then, as positives like the launch and early acceptance of Ocrevus and the promising clinical data on emicizumab/ACE910 in hemophilia has been offset by progress with competitive biosimilars, mixed results from next-gen oncology compounds, and worries about lead immuno-oncology drug Tecentriq.

It's tempting to say, “Roche is Roche… and it'll all just work out in the end.” This is a well-regarded pharmaceutical company with a deep internal R&D effort that has not gone to the same excesses as some of its peers in attempting to cost-cut its way to prosperity. At the same time, we're all still learning as we go when it comes to immuno-oncology, and it is tough to say how Roche will stand against the likes of Merck (MRK), Bristol-Myers (BMY), and many others in the years to come.

I do still believe Roche is undervalued, but major upcoming updates (like Tecentriq in first-line non-small cell lung cancer) in the second half of 2017 and on into 2018 are key to the modeling assumptions that drive the fair value.

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A Year Later, It's Still 'Hurry Up And Wait' For Roche

Zoetis: A Well-Loved Leader

A company with leading share in almost every relevant segment of a $24 billion market, strong margins, and strong barriers to entry arguably should trade at healthy multiples, so I can't say that the valuation of Zoetis (NYSE:ZTS) comes as much of a surprise. What's more, the company isn't done growing and expanding, as the company can still target share growth in Europe, market growth in emerging markets like China, margin improvement, and expansion into adjacent markets/products. Even so, the valuation gives me pause, as I believe it already factors in strong growth and over $2.1 billion in free cash flow in 2026.

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Zoetis: A Well-Loved Leader

Celldex Could Really Use Some Strong Data

Celldex Therapeutics (NASDAQ:CLDX) is still back on its heels after the deeply disappointing announcement earlier this year that the company's lead compound failed an interim futility analysis. While the company does have a deep pipeline of other immuno-oncology and oncology antibody-drug conjugate (or ADCs) candidates, the reality is that much of this pipeline is early-stage and the field is both brutally competitive and witheringly difficult.

Given the data that have come out on the company's pipeline candidates since my last update, as well as data from potentially competitive therapies, I'm not as bullish as I was before. I still think that Celldex is undervalued, but I'm more concerned about how glembatumumab (or "glemba") will perform in the real-world market, and I'm concerned that key pipeline IO drugs like varlilumab and CDX-1401/CDX-301 may not be effective enough to become major contributors.

Sifting through early-stage data demands a lot of "could's," "seems," and "may be's," so I don't exclude the possibility that additional studies will show greater benefit. Likewise, I think it's fair to say that Celldex is deep in Wall Street's doghouse and probably has a higher burden of proof now. All that said, while I do think Celldex should sport a double-digit fair value, I feel like the arrow is pointing the wrong way in terms of recent clinical trial releases.

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Celldex Could Really Use Some Strong Data

Seeking Alpha: Roche Still Waiting For The Big Push

Although Roche (OTCQX:RHHBY) hasn't been a terrible stock over the last three years, it's hard not to look at the performance of companies like Bristol-Myers (NYSE:BMY), Merck (NYSE:MRK), and Amgen (NASDAQ:AMGN) with some envy. In the case of the first two peers, Roche has been slower to get into the immuno-oncology game, as both Bristol-Myers and Merck have seen good initial successes with their PD-1 antibodies (and, in the case of Bristol-Myers, its CTLA-4 antibody as well). Roche has also had to withstand more than a little concern and skepticism regarding the company's ability to defend its lucrative oncology franchise from impending biosimilar competition and growing worries about pricing.

I do continue to believe, though, that Roche has an attractive future. While the company was somewhat late to the game in immuno-oncology, the company is bringing a lot to bear in terms of numerous combo therapy candidates. The company is also seeing some traction in its non-oncology franchise, with encouraging results in multiple sclerosis and hemophilia. Biosimilar competition and price resistance remain real risk factors, but I believe Roche's pipeline can support long-term free cash flow growth in the high single digits and a fair value in the mid-$30s.

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Roche Still Waiting For The Big Push

Seeking Alpha: Roche's Deep Pipeline And Strong R&D Platform Make For A Long-Term Winner

You're not going to often hear me say that earnings don't matter, but I don't believe that Roche's (OTCQX:RHHBY) reported financials are going to be the driving factor behind the share price performance in 2016 and 2017. I am expecting that investors will, instead, put more emphasis on the company's clinical trial performance, as data read-outs over the next two years will go a long way toward shaping the future of Perjeta, Gazyva, and atezolizumab.

My basic view of Roche remains that the company is well-placed to play a major role in the evolving field of immuno-oncology and that recent clinical successes in hemophilia, asthma, and multiple sclerosis give it a little more of a balanced mix. I'm looking for Roche to generate around 5% long-term revenue growth, largely on the back of oncology, with additional cash flow leverage pushing the FCF growth rate into the high single-digits. Discounted back, that supports a fair value just shy of $36 today.

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Roche's Deep Pipeline And Strong R&D Platform Make For A Long-Term Winner

Seeking Alpha: Roche Could Be A Victim Of Its Own Success

Roche (OTCQX:RHHBY) (ROG.VX) hasn't done all that well in the market of late, with the shares down about 6% over the past year. Then again, that's not so bad in the larger context - Pfizer (NYSE:PFE) and Bristol-Myers (NYSE:BMY) have done significantly better (both up about 11%), but Novartis (NYSE:NVS), Merck (NYSE:MRK), and AstraZeneca (NYSE:AZN) have performed just as poorly or worse than Roche.

This market performance forms an interesting contrast with the news that Roche has been reporting. The company continues to advance one of the deepest oncology/immuno-oncology portfolios, and the company's efforts outside of cancer have achieved some notable successes of late in hemophilia and multiple sclerosis.

Even so, the question remains as to whether this will be enough to push the company back to double-digit earnings growth. Not only are politicians taking a harsher tone on drug pricing, but Roche faces significant challenges from biosimilars and intense competition in oncology. I continue to believe that Roche is a high-quality, well-run drug company, but Roche's success not only makes it a prime target for its competition but also makes it harder for the next generation of blockbusters to do more than simply maintain what the company already has.

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Roche Could Be A Victim Of Its Own Success

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.

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Everything's Coming Up Roches

Seeking Alpha: Stronger First Quarter Sales Help Roche, But ASCO Probably Matters More

Swiss drug and diagnostics giant Roche (OTCQX:RHHBY) is in a challenging position today. On one hand, this remains the preeminent global oncology franchise with three incredible strong mature drugs and a deep pipeline. Roche is also a strong player in several diagnostics markets and has arguably done more than any other drug company to advance the companion diagnostics concept. The other hand is the uncertainty around the cash flow streams - many investors are worried about the prospect of generic competition for those "Big Three" oncology drugs, as well as the risk that Bristol-Myers (NYSE:BMY), Merck (NYSE:MRK), and AstraZeneca (NYSE:AZN) might not only beat Roche to the punch, but preclude the company from being a market share leader in oncology.

For my part, I think the push-pull of the Street has these shares more or less fairly priced. I'm content to own the fairly-priced shares of a great company, and I think Roche is exactly that. What's more, I see more potential to the upside from pipeline successes than downside risk to failures and generic competition. That said, I will once again repeat a complaint I've made multiple times regarding Roche - I'd like to see a stronger pipeline and R&D effort outside of oncology.

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Stronger First Quarter Sales Help Roche, But ASCO Probably Matters More

Seeking Alpha: Poor Pipeline Productivity Has Left Roche More Vulnerable

I bought Roche (OTCQX:RHHBY) years ago because I thought that the Street was overly concerned about near-term threats to the company's oncology portfolio and was overlooking the long-term potential of a true giant in oncology and an underrated player in global pharmaceuticals and diagnostics. I really can't complain about the performance since my early 2011 purchase, as Roche's 90%-plus gain has outstripped Novartis (NYSE:NVS), Johnson & Johnson (NYSE:JNJ), Glaxo (NYSE:GSK), Pfizer (NYSE:PFE) and Novartis . Of the stocks I was looking at at that time (when I decided to sell Johnson & Johnson), only Amgen (NASDAQ:AMGN) and Bristol-Myers (NYSE:BMY) have done better.

Since then, though, Roche has underwhelmed me with its R&D productivity. The company has done fine with its oncology drug development, but its repeated failures outside of oncology have left the company with a gap in its pipeline and vulnerability to potential price competition in immuno-oncology. Absent a more comprehensive re-think of its approach to R&D, it may be time to think about taking profits in this Swiss drug and diagnostics giant.

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Poor Pipeline Productivity Has Left Roche More Vulnerable

The Motley Fool: Keep Calm and Carry On, Roche Stock

Swiss drug giant Roche (NASDAQOTH: RHHBY  ) has continued a reasonable run of performance in the stock market. The Swiss-listed shares have delivered middle-of-the-road performance this year relative to other Big Pharma names like Lilly, Merck (NYSE: MRK  ) , Bristol-Myers (NYSE: BMY  ) , and Pfizer and still offers a solid dividend. Roche continues to sport one of the strongest oncology pipelines in the space, but the company also has the opportunity to drive upside from its non-oncology pipeline, an area that hasn't generated as much value in recent years.

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Keep Calm and Carry On, Roche Stock

The Motley Fool: Forget Earnings - Catalysts Incoming for Novartis Stock

With Novartis (NYSE: NVS  ) in the midst of a business transformation process and management projecting significant improvements, investors are a little less interested in quarterly results for the time being. Results for the second quarter were OK, but sluggish growth in Pharma highlights the importance of good clinical data on LCZ696 in heart failure and progress over the next 12 months in the immuno-oncology portfolio. 

The Street is pretty bullish on these shares, though the performance on a year-to-date basis has been more middle of the road between the likes of Merck (NYSE: MRK  ) , Bristol-Myers (NYSE: BMY  ) , Pfizer, and Roche. It would seem that a lot of optimism on LCZ696 and margin improvements is getting worked into the shares and while stronger-than-expected data on LCZ696 and/or the immuno-oncology portfolio would be well-received, I think investors already expect more from Novartis than virtually any other Big Pharma company.

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Forget Earnings: Catalysts Incoming for Novartis Stock

The Motley Fool: Is Roche's Dividend In Danger?

Swiss giant Roche (NASDAQOTH: RHHBY  ) swims in treacherous waters. The pharmaceutical industry can be a challenging place to operate, as companies must spend $1 billion or more to develop a new drug and a majority of those that are put into development will fail to reach the market. Even if a company can beat the odds and get a drug to market, it will almost certainly face multiple competitors and a limited time of patent protection before generic manufacturers can sell knock-offs. 

Even with that backdrop, Roche looks like a good bet to continue paying a healthy dividend. Roche has established itself as the leading player in biologic drugs and oncology, and a rich pipeline (backed by spending nearly 20% of sales dollars on R&D) bodes well for the future. Biosimilars are a threat to the company's established products and emerging areas like immuno-oncology have no shortage of would-be rivals, but Roche pursues a good balance of risk and reward with its pipeline and steady debt reduction efforts should free up even more capital in the coming years.

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Is Roche's Dividend In Danger?

The Motley Fool: Will Merck's Bold Hepatitis C Play Pay Off?

There is a significant (and sometimes larger than expected) gap between "looks like it can compete" and actually competing with a rival that has both strong data and a big head start, but Merck (NYSE: MRK  ) continues to show that it is serious about competing with Gilead (NASDAQ: GILD  ) and AbbVie (NYSE: ABBV  ) in the market for advanced therapies for hepatitis C (or HCV). The company's nearly $4 billion acquisition of Idenix (NASDAQ: IDIX  ) is an expensive affirmation of that long-term focus, but one that could start paying off before the end of the decade.

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Will Merck's Bold Hepatitis C Play Pay Off?

The Motley Fool: 3 Reasons to Like Zoetis

Wall Street is often willing to pay extra to sleep better at night, and Zoetis (NYSE: ZTS  ) is the sort of business that won't often lead investors to lose much sleep. The largest player in animal health, Zoetis is in the top three in every relevant sub-market it addresses and is often #1 or #2, but its leading product is less than 10% of sales and the top 10 list of products is less than 40% of revenue. Helping Zoetis' valuation even further is the relative lack of alternatives – companies like Neogen, Virbac, and Dechra are much, much smaller (and harder to own for larger funds), while the big comparables remain locked within large pharmaceutical companies like Merck (NYSE: MRK  ) , Sanofi (NYSE: SNY  ) , and Lilly (NYSE: LLY  ) .

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3 Reasons to Like Zoetis