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On Wednesday, BNP Paribas (OTC:BNPQY) Exane initiated coverage on Roche Holding AG (OTC:RHHVF) (ROG:SW) (OTC: RHHBY (OTC:RHHBY)), a Swiss multinational healthcare company with a market capitalization of $260.43 billion. According to InvestingPro data, the company has demonstrated strong momentum with a 29.98% return over the past year and maintains an impressive track record of 28 consecutive years of dividend increases. The firm started with an Outperform rating and set a price target of CHF300.00 for the company’s stock. The new coverage by the firm’s analyst Peter Verdult is based on a discounted cash flow (DCF) analysis, which also includes a bull-bear scenario valuation ranging from CHF379 to CHF198 per share. This analysis aligns with Roche’s strong financial health, reflected in its "Good" InvestingPro overall score of 2.9 and robust gross profit margin of 74.79%.
Verdult noted that although Roche may not demonstrate the strongest growth in the near term, several factors are expected to contribute to the company’s reevaluation. Key among these are the pipeline readouts projected through 2025/26, including the anticipated data on orfoglipron, which is estimated to have a net present value (NPV) per share of CHF8. Additionally, the analyst highlighted the growing recognition of Roche’s recent partnership with Zealand Pharma (NASDAQ:ZEAL), which is expected to play a significant role in the company’s future prospects.
The partnership with Zealand Pharma is particularly notable as Verdult expects the amylin analog, a focus of the collaboration, to become a foundational therapy in the treatment of obesity, alongside GLP-1 therapies. The analyst’s positive outlook is further supported by extending revenue and earnings per share (EPS) forecasts to the year 2040, capturing the potential long-term benefits of Roche’s strategic moves.
Verdult projects a compound annual growth rate (CAGR) for Roche’s revenue and EPS from 2025 to 2030 to be 3% and 4%, respectively. This forecast is said to be substantially higher than the consensus estimates for the period after 2030, suggesting a more optimistic view of Roche’s financial performance in the long run. The comprehensive analysis by BNP Paribas Exane positions Roche as a company with promising prospects, as reflected in the Outperform rating and the CHF300.00 price target. For deeper insights into Roche’s valuation and growth potential, including 8 additional ProTips and comprehensive financial analysis, visit InvestingPro.
In other recent news, Roche’s Phase III MUSETTE trial for a higher dose of Ocrevus in relapsing multiple sclerosis did not meet its primary endpoint, reaffirming the efficacy of the current 600 mg dose. Despite this, the higher dose was well tolerated, supporting the continued use of the existing treatment. Meanwhile, UBS upgraded Roche’s stock rating to Buy, raising the price target to CHF 338.00, citing the strong performance of drugs like Vabysmo and Ocrevus as key growth drivers. UBS also noted the potential benefits from Xolair for food allergies and Elevidys outside the U.S. as contributing factors to the positive outlook.
Additionally, Genentech, part of the Roche Group, received FDA approval for Susvimo for diabetic macular edema treatment, offering a less frequent alternative to current therapies. This approval follows positive results from the Phase III Pagoda study, which demonstrated sustained vision improvements. Deutsche Bank (ETR:DBKGn) raised Roche’s price target to CHF 265.00 while maintaining a Sell rating, noting the company’s solid performance but highlighting future challenges due to patent expirations.
Deutsche Bank also pointed out potential risks to Roche’s earnings from upcoming data on AstraZeneca (NASDAQ:AZN)’s Enhertu, which could affect market share. The competitive landscape for Roche includes pressures from products like Hemlibra and Vabysmo, requiring close monitoring by investors. These developments reflect ongoing strategic shifts and challenges within Roche’s portfolio.
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