Roche Executing Commercially, But R&D Productivity Remains A Work In Progress

Summary

• Roche share price performance has been flattish of late, but that's good for some relative outperformance as the pharmaceutical sector has underperformed.
• Roche has seen further clinical setbacks recently, including tiragolumab and prasinezumab, but management has been changing the company's approach to drug development and axing programs earlier in development.
• Roche continues to use strategic M&A as a pipeline-building tool, including recent deals with Innovent Biologics and Poseida Therapeutics.
• I've been critical of Roche's R&D approach over the years, but I think there's evidence of change and mid-to-high single-digit revenue, earnings, and FCF growth can support a double-digit return.

HJBC

Roche (OTCQX:RHHBY) has been a middling performer since my last update on this Swiss pharmaceuticals and diagnostics giant. Although the current financial performance of the company remains healthy, concerns about the pipeline continue to weigh, particularly with a recent

Analyst’s Disclosure: I/we have a beneficial long position in the shares of RHHBY either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.