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Roche Holding Ltd (CH:RO)
:RO
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Roche Holding Ltd
(RO)
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Rating:78Outperform
Price Target:
CHF406.00
▲(21.12% Upside)
The score is driven primarily by strong financial quality (high profitability and solid free cash flow) and supportive technical momentum (price above key moving averages with positive MACD). Earnings call outlook is constructive with growth and margin expansion guidance, though tempered by FX, China diagnostics headwinds, LOE pressure, and some safety/regulatory uncertainty. Valuation is reasonable but not cheap at a 22.2 P/E, with a supportive 2.7% dividend yield.
Positive Factors
Cash Generation & Profitability
Consistently strong operating and free cash flow provide durable funding for R&D, capital spending and dividends. Robust cash generation supports sustained pipeline investment, large manufacturing projects and shareholder returns even through revenue cyclicality.
Diversified Pharma + Diagnostics Model
Dual‑division exposure combines high‑value, patent‑protected specialty medicines with recurring consumables and service revenue from diagnostics. This mix creates revenue stability and cross‑selling opportunities, cushioning pharma cyclicality and supporting long‑term margins.
Deep, Advancing Pipeline
A large cohort of NMEs advancing into Phase III materially increases Roche’s medium‑term product runway and risk‑adjusted growth prospects. More late‑stage assets raise the probability of future commercial launches and revenue diversification beyond current blockbusters.
Negative Factors
China Diagnostics Pricing Reforms
Sustained pricing reforms in China structurally compress diagnostics revenue and margins in a critical market. Given China’s scale, prolonged weaker reimbursement materially reduces recurring consumables income and pressures segment profitability over the next several quarters.
Loss of Exclusivity & Biosimilars
Material LOE hits and impending biosimilar entries erode protected revenue streams and pricing power for legacy biologics. These structural revenue losses require successful new launches or steady pipeline conversions to sustain long‑term top‑line and operating leverage.
Regulatory/Safety Uncertainty (BTK class)
Safety signals and heightened class scrutiny can delay approvals, restrict labels or trigger additional studies. For key late‑stage assets, such regulatory uncertainty raises development timelines and commercialization risk, potentially diminishing long‑term expected value from these programs.
Roche Holding Ltd (RO) vs. iShares MSCI Switzerland ETF (EWL)
Market Cap
CHF279.83B
Dividend Yield2.88%
Average Volume (3M)28.08K
Price to Earnings (P/E)22.4
Beta (1Y)1.36
Revenue Growth4.77%
EPS Growth-11.07%
CountryCH
Employees103,249
SectorHealthcare
Sector Strength45
IndustryDrug Manufacturers - General
Share Statistics
EPS (TTM)8.38
Shares Outstanding106,691,000
10 Day Avg. Volume29,793
30 Day Avg. Volume28,076
Financial Highlights & Ratios
PEG Ratio0.00
Price to Book (P/B)0.00
Price to Sales (P/S)0.00
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Roche Holding Ltd Business Overview & Revenue Model
Company DescriptionRoche Holding AG engages in the pharmaceuticals and diagnostics businesses in Switzerland, Germany, the United States, Austria, Netherlands, the United Kingdom, France, Belgium, and internationally. The company offers pharmaceutical products for treating oncology, neuroscience, infectious, immunology, cardiovascular and metabolism, ophthalmology, and respiratory, as well as anemia, cancer, dermatology, hemophilia, inflammatory and autoimmune, neurological, and transplantation. It also offers in vitro tests for the diagnosis of various diseases, such as cancer, diabetes, Covid-19, hepatitis, human papillomavirus, and other diseases. In addition, the company supplies diagnostic instruments and reagents. The company was founded in 1896 and is headquartered in Basel, Switzerland.
How the Company Makes MoneyRoche generates revenue primarily through its pharmaceutical sales and diagnostics divisions. The pharmaceutical segment accounts for the majority of its revenue, with key products including cancer therapies like Avastin, Herceptin, and Rituxan, as well as treatments for multiple sclerosis and hemophilia. The diagnostics segment contributes significantly through sales of laboratory instruments and reagents for blood testing, pathology, and molecular diagnostics. Roche also engages in partnerships with biotechnology firms and academic institutions to enhance its research capabilities and expand its product offerings. The company further benefits from a strong pipeline of new drugs and ongoing investments in personalized medicine, which help to drive future earnings growth. Additionally, Roche's global presence and established market position allow it to capitalize on emerging healthcare trends and expand into new markets.
Roche Holding Ltd Earnings Call Summary
Earnings Call Date:Jan 29, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Jul 23, 2026
Earnings Call Sentiment Positive
The call conveyed a strongly positive operational and pipeline story: solid top‑line growth (7%), robust core operating profit expansion (+13%), multiple high‑impact regulatory approvals and a record number of NMEs advancing to Phase III. Management emphasized disciplined capital allocation, sizeable U.S. investment commitments and a busy 2026 newsflow. Key near‑term headwinds — chiefly the China diagnostics pricing reforms, higher taxes, working capital drag on cash flow, currency translation effects, LOE pressures and some safety/regulatory scrutiny around the BTK class — were acknowledged and framed as manageable. On balance the positives (growth, margin expansion, major pipeline wins and strategic launches) outweigh the negatives, while management provided a constructive 2026 outlook (mid‑single‑digit sales, high single‑digit core EPS).Q4-2025 Updates
Positive Updates
Group Sales Growth
Group sales grew 7% in 2025 (constant exchange rates). Pharma sales grew 9% to CHF 47.7 billion; Diagnostics reported +2% overall but +7% excluding China healthcare pricing reforms.
Strong Operating Performance
Core operating profit increased 13% year‑over‑year, delivering a core operating margin expansion of +1.9 percentage points. Pharma core operating profit margin reached ~49.2%.
Core EPS and IFRS Net Income Progress
Core EPS rose ~11% for the year; IFRS net income increased 58% (noting a large prior‑year impairment base; adjusted operational comparison ~+20%).
Pipeline and Regulatory Momentum
Substantial Q4/Q4‑to‑date pipeline progress with multiple regulatory approvals and filings: EU approval for Gazyva in lupus nephritis; U.S. and EU approval of Lunsumio subcutaneous for third‑line+ follicular lymphoma; U.S. filing for giredestrant in post‑CDKi ER+/HER2‑ metastatic breast cancer.
Multiple Positive Phase III/II Readouts
Numerous successful trials including two positive Phase III fenebrutinib studies (FENtrepid in PPMS and FENhance in RMS), positive lidERA (giredestrant) adjuvant result with IDFS hazard ratio 0.70, positive Enspryng and vamikibart data, PiaSky aHUS result, additional positive Phase IIIs for Gazyva (INS and SLE) and a positive Phase II for CT‑388 in obesity.
Record Advancement of NMEs
A record 10 new molecular entities (NMEs) moved into Phase III — the largest cohort in Roche history, improving the risk‑adjusted pipeline value and future revenue potential.
Diagnostics Innovation & New Product Launches
Regulatory approvals and launches in Diagnostics included the Elecsys dengue antigen test, cobas BV/CV assay and automated clinical mass spectrometry (cobas Mass Spec 601). AXELIOS Sequencing Solution launched, positioned as a high‑throughput NGS offering (potential >CHF 1bn opportunities per product).
On‑market Brand Strength
Strong growth from key brands: Phesgo (+48%), Vabysmo (global growth; U.S. uptake improving), Xolair (+32%, >100,000 food allergy patients treated since launch), Ocrevus (9% growth and accelerating subcutaneous uptake), Polivy (U.S. patient share 36% in 1L DLBCL), Evrysdi (>21,000 patients on treatment). Hematology grew ~15% (CHF 8.6bn).
Financial Discipline and Capital Allocation
Company met/upgraded guidance during the year (ended at the top end of guidance), continued dividend increases in CHF, reduced net debt by CHF 1.1 billion year‑end, and committed to invest USD 50 billion in the U.S. over 5 years (R&D and PP&E).
Clear 2026 Guidance
Management guided 2026 to mid‑single‑digit group sales growth and high single‑digit core EPS growth, while expecting continued dividend increases and margin stabilization/expansion.
Negative Updates
China Healthcare Pricing Reforms Impact Diagnostics
Diagnostics sales were materially impacted by Chinese healthcare pricing reforms: sales in China declined ~24% (impact ~CHF 579 million). Diagnostics grew only 2% overall in 2025 but would have been +7% excluding China.
Cash Flow and Working Capital Pressure
Operating free cash flow declined to CHF 16.2 billion from CHF 20.2 billion (approx. ‑CHF 4.0 billion or ~‑20%), driven by a large increase in trade receivables and net trade working capital (net trade working capital movement ≈ ‑CHF 2.2 billion) and higher inventories (tariff mitigation stocking).
Higher Tax Load and Core EPS Headwind
Core EPS momentum slowed relative to core operating profit mainly due to higher tax expense (~CHF 579 million increase); effective tax rate rose to ~18.6% in 2025 and management expects nearer ~20% in 2026.
Loss of Exclusivity (LOE) and Patent Dynamics
LOE impacts were material for the year (management cited ~CHF 700 million and Alan referenced ~CHF 745 million), and biosimilar pressures were visible (Actemra declined 2% overall and worse in Q4; Xolair faces expected biosimilar entry by end‑2026).
Diagnostics Margin & Cost Pressures
Diagnostics core operating margin fell (‑1.1 percentage points in constant exchange rates) due to China reforms, higher cost of placements for machines, production ramp‑up (CGM, sequencing) and tariffs (tariff impact ~CHF 64 million).
Currency Headwinds
Weak U.S. dollar weighed on reported results: translation effects reduced sales by ~5 percentage points and core operating profit by ~8 percentage points (core EPS impact ~‑7pp). Management flagged currency as a continuing 2026 headwind if rates persist.
Regulatory / Safety Uncertainty for Fenebrutinib
Fenebrutinib had two cases of elevated liver enzymes with bilirubin (one adjudicated Hy’s Law case) that triggered an FDA clinical hold element; management is monitoring pooled safety pending FENhance 1 readout. Broader BTK‑class regulatory scrutiny (e.g., tolebrutinib CRL) increases attention on safety readouts.
Short‑term Market Dynamics for Vabysmo and Branded Ophthalmology Market
U.S. branded intraocular biologics market contracted ~15% in 2025 due to co‑pay foundation dynamics and rebasing; Vabysmo growth was impacted in the U.S. which may create a 2026 base effect despite management expecting acceleration.
One‑off and Near‑term Costs
Restructuring charges increased by ~CHF 300 million as part of efficiency measures; milestone income was lower by CHF ~87 million versus prior year; equity securities mark‑to‑market was negative (~CHF 88 million).
Company Guidance
Roche guided 2026 to mid‑single‑digit group sales growth and high single‑digit core EPS growth (core EPS reported at CHF 19.46 in 2025, adjusted starting base CHF 19.83), while expecting to further increase the dividend in Swiss francs; Diagnostics is guided to mid‑single‑digit growth in 2026 (recovering to mid‑ to high‑single digits by 2027 as China headwinds abate) and the firm expects an LOE impact of roughly CHF 1.0 billion in 2026 (CHF 1–1.5bn on an ongoing basis). Management flagged an effective tax rate around 20% for 2026, plans to expand margins in 2026, anticipates improved cash conversion after CHF 16.2bn operating free cash flow in 2025, and warned of currency headwinds (2025 FX cost ~‑5 percentage points on sales; holding end‑2025 rates would imply roughly ‑4ppt on 2026 sales and ‑6ppt on core operating profit/EPS).Roche Holding Ltd Financial Statement Overview
Summary
Strong profitability profile (high gross margins and solid EBIT margins) and robust free cash flow generation. Offsetting factors include uneven revenue/earnings trajectory across years, some margin volatility, and a higher (though manageable) leverage profile versus earlier years.Income Statement
Roche shows strong underlying profitability, with consistently high gross margins (~69–74%) and solid operating profitability (EBIT margin generally in the low-to-high 20s). After a soft 2024 in earnings (net margin ~13%), 2025 rebounded sharply (net margin ~21%) alongside a very strong reported revenue increase. Key watch-outs are uneven top-line growth (including prior declines) and some margin volatility year-to-year.82
Very Positive
Balance Sheet
The balance sheet is generally sound for a large pharma, with equity in the ~CHF 29–36B range and debt-to-equity mostly around ~0.9–1.1 (2025 ~0.94). Leverage is meaningfully higher than 2020 (when debt-to-equity was ~0.42), which reduces flexibility, but it has improved from the peak around 2021–2024 (above ~1.1 at times). Overall, leverage looks manageable, though not conservative.70
Positive
Cash Flow
Cash generation is solid: operating cash flow is consistently strong (~CHF 16–21B) and free cash flow remains robust (~CHF 11–16B). Free cash flow has covered a large portion of earnings (roughly ~63–79% across the period), supporting quality of profits, but conversion weakened somewhat in 2025 versus 2024 as operating cash flow declined while net income rose. Free cash flow growth has also been uneven, with several negative years despite the recent improvement.77
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 61.52B | 62.40B | 60.44B | 65.81B | 62.80B |
| Gross Profit | 44.87B | 46.11B | 44.08B | 44.44B | 43.10B |
| EBITDA | 18.32B | 16.62B | 18.41B | 20.80B | 22.19B |
| Net Income | 12.88B | 8.28B | 11.50B | 12.42B | 13.93B |
Balance Sheet | |||||
| Total Assets | 100.70B | 101.80B | 90.47B | 88.15B | 92.32B |
| Cash, Cash Equivalents and Short-Term Investments | 15.48B | 17.32B | 10.51B | 9.77B | 13.03B |
| Total Debt | 31.64B | 36.35B | 30.78B | 26.54B | 32.55B |
| Total Liabilities | 62.82B | 65.64B | 57.20B | 56.14B | 63.97B |
| Stockholders Equity | 33.80B | 31.77B | 29.32B | 27.99B | 24.49B |
Cash Flow | |||||
| Free Cash Flow | 14.08B | 15.09B | 11.45B | 13.34B | 16.02B |
| Operating Cash Flow | 17.83B | 20.09B | 16.09B | 17.89B | 20.57B |
| Investing Cash Flow | -8.71B | -11.39B | -10.64B | -3.57B | -6.55B |
| Financing Cash Flow | -10.18B | -6.82B | -4.24B | -15.72B | -12.70B |
Roche Holding Ltd Technical Analysis
Positive
335.20
Price Trends
335.27
Positive
310.56
Positive
293.08
Positive
Market Momentum
6.20
Positive
61.15
Neutral
49.90
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CH:RO, the sentiment is Positive. The current price of 335.2 is below the 20-day moving average (MA) of 350.65, below the 50-day MA of 335.27, and above the 200-day MA of 293.08, indicating a bullish trend. The MACD of 6.20 indicates Positive momentum. The RSI at 61.15 is Neutral, neither overbought nor oversold. The STOCH value of 49.90 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CH:RO.
Roche Holding Ltd Peers Comparison
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | CHF218.15B | 18.38 | ― | 3.18% | 7.62% | -18.33% | |
78 Outperform | CHF279.83B | 22.37 | ― | 2.88% | 4.77% | -11.07% | |
75 Outperform | CHF31.19B | 34.34 | 4.82% | 0.44% | 0.39% | -12.46% | |
70 Outperform | CHF33.79B | 104.15 | ― | 0.09% | 6.22% | ― | |
59 Neutral | CHF26.92B | 136.44 | 2.64% | 1.02% | ― | ― | |
56 Neutral | CHF35.87B | 38.75 | ― | 0.75% | 5.93% | 29.83% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% |
* Healthcare Sector Average
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Roche Holding Ltd
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.