Investment Thesis
Hoffman-La Roche AG (OTCQX:RHHBY) is an industry leader within the oncology (cancer) treatment niche. Management has secured excellent financial performance in the past but looking at the present and the future there are a few uncertainties. Some of the major revenue drivers within oncology has gone off patent in 2019. Management has a firm belief in the new products and its pipeline to cover the gap, but it remains to be seen how that will unfold. Roche holds a strong pipeline with high relevancy for several major disease areas of oncology even widening its portfolio to include more areas. With a growing global cancer burden in the coming decades, the investor can still expect Roche to stay relevant. Its other divisional areas are also doing well but all eyes will be focused on how oncology develops. The stock trades at a P/E of 18 and a forward P/E of 17 which appears on the higher end considering management is guiding for low- to mid- single digit revenue growth for 2021 and with the previously mentioned uncertainties about how the pipeline will unfold. Despite a growing marketplace, a broadening and strong portfolio, a strong track record for growing top and bottom line, it appears that the stock price will be trotting along slowly while we wait for the pipeline to unfold. I'm long Roche, but I think being a new investor in the company requires patience.
Introduction
I've been long Roche since October 2019 where I purchased shares at $37.02 á share. As such, I'm holding an appreciation of 13.3% not including the dividend after roughly a year and a half. Not stellar, not poor. My thesis for entry is that I believe there is a simple and overshadowing reason as to why one would consider holding shares in Roche. They are the world's leading provider of
