UBS lifts Roche stock rating to Buy, raises target to CHF338

On Thursday, UBS analyst Matthew Weston upgraded Roche Holding (OTC:RHHBY) stock from Neutral to Buy, adjusting the price target to CHF 338.00, up from the previous CHF 300.00. The upgrade comes as the stock trades near its 52-week high of $42.43, with a strong year-to-date return of 15.34%. According to InvestingPro data, the stock’s RSI suggests overbought territory, though Weston’s assessment places Roche third among global Major Pharma peers based on six strategic parameters and valuation. The analyst cites the sustained outperformance of Roche’s drugs Vabysmo and Ocrevus as key growth drivers in the near term. Additionally, the potential benefits from Xolair for food allergies and possible gains from Elevidys outside the United States contribute to the positive outlook.

UBS’s forecasts for Roche’s financial performance by the fiscal year 2025 (FY25) are at the higher end of the company’s own guidance range. Looking further ahead, by the fiscal year 2029 (FY29), UBS’s Core Earnings Per Share (EPS) estimate is 7% above the Visible Alpha consensus. This projection reflects a more optimistic view of Roche’s mid-term financial performance. InvestingPro data shows Roche’s solid financial foundation, with a healthy gross profit margin of 74.79% and strong cash flows that sufficiently cover interest payments. The company maintains a moderate debt level with a debt-to-capital ratio of 0.13.

Weston acknowledges that upcoming readouts for AstraZeneca (NASDAQ:AZN)’s Enhertu could increase competitive pressures on Roche’s HER2 franchise. Nevertheless, he believes that the robust conversion to Phesgo, Roche’s subcutaneous formulation of Herceptin and Perjeta, will help maintain a sustainable franchise. The analyst also notes that the market’s expectations for Roche’s cancer immunotherapy Tecentriq have aligned with UBS’s more conservative estimates.

The upgrade by UBS indicates a confidence in Roche’s product portfolio and its ability to drive growth. Roche’s stock price is expected to reflect the anticipated performance improvements and strategic developments highlighted by UBS.

In other recent news, Genentech, a part of Roche Group, announced the FDA’s approval of Susvimo for the treatment of diabetic macular edema (DME). The approval follows positive results from the Phase III Pagoda study, demonstrating the drug’s effectiveness and safety. This development provides a more convenient treatment option for DME patients, requiring fewer treatments per year compared to standard monthly injections.

In analyst actions, Deutsche Bank (ETR:DBKGn) increased Roche’s stock target to CHF265, maintaining a Sell rating. The adjustment comes on the back of Roche’s solid performance and the provision of its full-year 2025 guidance. However, the analyst also highlighted potential challenges Roche may face beyond 2026 due to the expiration of patents on key drugs.

TD Cowen raised concerns about the global pharmaceutical industry’s future due to the impact of U.S. tariffs, geopolitical tensions, and unpredictable responses from foreign governments. Roche was noted to have a substantial presence in China, which could be affected by these factors.

Roche’s experimental Parkinson’s disease drug, prasinezumab, failed to meet its primary objective in a mid-stage trial, marking a setback in the development of potential treatments for the neurodegenerative condition. Despite this, Roche plans to continue evaluating the data and collaborate with health authorities for the next steps.

Finally, CFRA initiated coverage on Roche shares with a Hold rating, reflecting the company’s restructuring of its R&D pipeline following a series of unsuccessful late-stage clinical trials. The firm anticipates that Roche’s growth will be supported by new pharmaceutical products, sustained performance in the Diagnostics segment, and cost management.

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