ROG-CHE - Embedded Expectations Analysis - 2018 09 21
Roche Holding AG (ROG:CHE) currently trades near recent averages relative toUAFRS-based (Uniform) Earnings, with a 15.4x Uniform P/E. At these levels, the market has bearish expectations for the firm, and management is concerned about growth, their late-stage portfolio, and financial results going forward
Specifically, management may lack confidence in their ability to sustain strong growth in the U.S., which has been primarily driven by new product introductions. Moreover, they may lack confidence in the potential of their late-stage portfolio, and their ability to sustain growth of their margins and top-line in Pharma. They may also lack confidence in their ability to sustain strong core financial results, and in their development of royalty and other operating income sources. Furthermore, they may lack confidence in the potential of their strategic transactions in Flatiron and FMI, and in their decision to divest Chugai assets in H1 2018. Additionally, they may lack confidence in their ability to sustain growth of Lucentis and blood glucose monitoring, and may be concerned about the results of the HAVEN 3 study. Moreover, they may lack confidence in expectations to receive accelerated filing for Avastin, and may be exaggerating the benefits of combining both Tecentriq and Avastin in cancer treatment. Finally, they may be concerned about greater than expected erosion in Herceptin, and may lack confidence in their ability to sustain growth in the installed base of their molecular segment
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