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Roche Holding (RHHBY)
OTHER OTC:RHHBY
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Roche Holding
(OTC:RHHBY)
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Rating:73Outperform
Price Target:
$63.00
â–²(11.01% Upside)
The score is driven primarily by strong underlying financial quality (high profitability and solid cash generation despite growth volatility and leverage). Technicals add support with a clear uptrend and positive momentum. Valuation is the main limiter (higher P/E and modest yield), while the latest earnings call was net positive on guidance and pipeline progress but flagged meaningful LOE, China Diagnostics, cash conversion, tax, and regulatory risks.
Positive Factors
Advancing late-stage pipeline
Multiple assets progressing to Phase III materially de-risks Roche’s future revenue profile and supports sustained growth beyond current franchises. Late-stage transitions increase probability of approvals, extend patent-protected revenue streams and justify continued R&D investment and resource allocation.
Strong cash generation
Consistently robust operating cash flow and a high cash-to-earnings conversion provide durable funding for R&D, dividends, and strategic M&A. This cash generation capacity cushions the business against cyclical pressures and supports reinvestment into high-return projects over the medium term.
Recent regulatory approvals
Recent approvals broaden Roche’s commercial portfolio and validate development capabilities, strengthening revenue diversification. Approvals can accelerate uptake in established channels, improve long-term cash flow visibility, and reduce reliance on older molecules facing loss of exclusivity.
Negative Factors
Falling profitability margins
A marked decline in net margins signals structural pressure on profitability which can erode free cash flow over time. Sustained margin compression limits ability to fund R&D or return capital, increases sensitivity to revenue shocks, and may necessitate efficiency programs that take time to yield benefits.
Diagnostics exposure to China reforms
Regulatory pricing changes in China represent a structural headwind for the Diagnostics division, reducing revenue predictability in a large market. Persistent lower pricing or reimbursement shifts could materially constrain division growth and force strategic reallocation of commercial and R&D resources.
Rising leverage and lower ROE
Increased leverage and a declining return on equity reduce financial flexibility and raise refinancing risk over time. Higher debt levels can increase interest costs and constrain capital allocation choices, limiting the company's ability to opportunistically invest in pipeline acceleration or large strategic transactions.
Roche Holding (RHHBY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$362.18B
Dividend Yield1.63%
Average Volume (3M)2.32M
Price to Earnings (P/E)23.7
Beta (1Y)0.26
Revenue Growth7.26%
EPS Growth-8.64%
CountryUS
Employees103,249
SectorHealthcare
Sector Strength45
IndustryDrug Manufacturers - General
Share Statistics
EPS (TTM)1.36
Shares Outstanding5,620,501,500
10 Day Avg. Volume2,307,101
30 Day Avg. Volume2,315,349
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 Cap0.85
Enterprise Value/Revenue6.65
Enterprise Value/Gross Profit9.09
Enterprise Value/Ebitda21.20
Forecast
1Y Price Target
$51.33Price Target Upside-9.55% Downside
Rating ConsensusModerate Buy
Number of Analyst Covering5
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Roche Holding 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 the sale of its pharmaceutical products and diagnostic tools. The Pharmaceuticals division accounts for the majority of the company's revenue, with key products including cancer treatments like Avastin and Herceptin, as well as other therapies for various diseases. The Diagnostics division contributes through the sale of diagnostic tests and equipment, which are essential for disease detection and management. Roche also benefits from long-term partnerships and collaborations with other pharmaceutical companies, research institutions, and healthcare providers, enhancing its product offerings and expanding its market reach. Additionally, its investment in research and development allows Roche to continuously innovate and introduce new therapies, further driving revenue growth.
Roche Holding 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 struck a broadly positive tone: Roche reported solid FY2025 financial results (7% sales growth, +13% core operating profit) and delivered exceptional pipeline momentum with multiple Phase III and regulatory successes (including record progression of NMEs to Phase III and major readouts for fenebrutinib and giredestrant). Management reiterated disciplined capital allocation, upgraded guidance execution and substantial near-term commercial opportunities (AXELIOS sequencing, diagnostics menu expansion, several on-market growth drivers). Key headwinds include significant Diagnostics disruption from China pricing reforms (CHF ~579m impact), weaker operating cash flow driven by working capital build, an increased tax burden affecting EPS momentum, currency and tariff pressures, and regulatory/safety uncertainty in the BTK space. On balance, the quantity and quality of positive clinical readouts, approvals and commercial traction materially outweigh the operational and macro headwinds reported.Q4-2025 Updates
Positive Updates
Group Revenue and Profit Growth
Group sales grew 7% (FY2025). Pharma sales up 9% and Diagnostics up 2% (would be +7% ex-China). Core operating profit increased 13% with a core operating margin expansion of +1.9 percentage points; core EPS rose ~11%.
Strong Pharma Commercial Performance
Multiple on-market drivers: Phesgo global conversion >50% (now ~54%), Ocrevus passed CHF 7 billion annual sales and is targeted to reach CHF 9 billion by 2029 (including ~CHF 2 billion from subcut), Hematology +15% (CHF 8.6bn), Polivy US patient share ~36%, Xolair grew ~32% (reaching ~CHF 3bn), Evrysdi >21,000 patients on treatment, Vabysmo continued global growth (12% for year) with expected acceleration in 2026.
Exceptional Q4 and Pipeline Readouts
Busy positive Q4 pipeline: two positive Phase III fenebrutinib readouts (PPMS FENtrepid and RMS FENhance 2), positive giredestrant lidERA (adjuvant HR 0.70 for IDFS; OS trending HR 0.79), additional positive Phase III results for Gazyva (INS, SLE), positive Phase III for Enspryng in MOG-AD, PiaSky in aHUS, and positive Phase II CT-388 in obesity.
Record R&D Progress — Late-Stage Acceleration
A record 10 NMEs moved into Phase III (company statement); 19 potential launches planned by decade-end (not all assured). Management notes >60% of NMEs post-bar and 66% of late-stage projects have best-in-disease potential.
Regulatory and Launch Milestones
Regulatory wins and filings: EU approval for Gazyva in lupus nephritis; U.S. and EU approvals for subcutaneous Lunsumio; U.S. filing for giredestrant in post-CDKi metastatic ER+/HER2- breast cancer. Diagnostics approvals include Elecsys dengue test, cobas BV/CV and Mass Spec menu expansion.
Diagnostics Innovation and Commercial Opportunities
Launch of AXELIOS Sequencing Solution (next-generation sequencing) with management citing >CHF 1 billion sales potential, plus a first fully automated clinical mass spec (cobas Mass Spec 601) and new assays (dengue antigen, cobas BV/CV).
Cash Deployment and US Investment Agreement
Agreement with U.S. government provides tariff and demo exemptions in exchange for commitments (including Medicaid rebates) and a pledged US investment of USD 50 billion over five years (R&D and PP&E), supporting manufacturing and R&D expansion in U.S. sites.
Operational Discipline and Guidance Delivery
Company delivered on upgraded guidance: FY sales growth of 7% (mid-single-digit target) and core EPS upgraded and achieved in the double-digit band; 2026 guidance set to mid-single-digit sales growth and high single-digit core EPS growth with expectation to further increase dividend in CHF.
Negative Updates
China Diagnostics Pricing Reforms Impact
Diagnostics sales in China declined ~24%, producing a headline Diagnostics sales drag of CHF ~579 million; Diagnostics grew only 2% for the year but would have been +7% excluding China headwinds.
Material Cash Flow and Working Capital Movements
Operating free cash flow declined to CHF 16.2 billion from CHF 20.2 billion (FY2024). Negative net trade working capital movement (~CHF 2.2 billion) driven by higher accounts receivable and inventory build (tariffs and precautionary inventory).
Higher Tax Load and Impact on EPS Momentum
Higher taxes reduced momentum: management cited approximately CHF 579 million of additional taxes; effective tax rate rose (18.1% to ~19.5% excl. dispute effects; reported ~18.6%) and company expects to hover near ~20% in 2026 — a drag on core EPS growth.
Loss of Exclusivity and LOE Headwinds
FY LOE impacts reported around CHF 700–745 million; expected LOE for 2026 approximately CHF 1.0 billion (ongoing erosion pressure to be managed).
Currency and Tariff Headwinds
Currency translation (weak USD) removed ~5 percentage points from sales growth and had larger relative impact on core operating profit and EPS (management cited -5pp sales, -8pp op profit, -7pp core EPS). Diagnostics also faced a tariff impact of ~CHF 64 million (half-year effect).
Regulatory / Safety Uncertainties in BTK Class
Fenebrutinib faced an FDA clinical hold related to two liver enzyme cases (one Hy's law case; one confounded by alcohol). Class-level CRLs (e.g., tolebrutinib) raised investor questions; Roche asserts fenebrutinib differentiation but regulatory/safety review remains a near-term risk pending FENhance 1 readout and pooled safety analyses.
Biosimilar and Market Access Pressures
Biosimilar competition impacting established products: Actemra sales down 2% (Q4 Q4 -10% in U.S.) and Xolair placed on IRA selection (a biosimilar expected by H2 2026), generating uncertainty around pricing/negotiation impacts in coming years.
Company Guidance
Roche guided 2026 to mid‑single‑digit group sales growth and high‑single‑digit core EPS growth, signaled a further Swiss‑franc dividend increase, and expects Diagnostics to grow mid‑single‑digits this year as China headwinds subside; management flagged an estimated loss‑of‑exclusivity impact of roughly CHF 1.0bn for 2026, a tax rate around 20% (versus 18.6% in 2025), and set a core‑EPS starting base of CHF 19.83 per share (after a CHF 0.37 FX/non‑monetary adjustment). For context they delivered 2025 group sales +7% (Pharma +9%, Diagnostics +2% / +7% ex‑China), core operating profit +13% and an operating free cash flow of CHF 16.2bn, expect a stronger cash year in 2026, and warned to model a divisional accounting shift that moves ~CHF 250m SG&A out of Pharma and ~CHF 50m out of Diagnostics into Corporate (≈‑0.5 and ‑0.4 percentage‑point margin effects).Roche Holding Financial Statement Overview
Summary
Strong profitability and margins with a clear 2025 earnings rebound, plus consistently positive free cash flow. Offsetting factors are uneven revenue/FCF growth over time and moderate-to-high leverage (improving but still elevated), which reduces flexibility if growth softens.Income Statement
Profitability remains a clear strength, with consistently high gross margins (~69%–74%) and solid EBIT margins (generally ~21%–32%). Earnings rebounded strongly in 2025 (net margin ~21% vs. ~13% in 2024), showing good operating leverage. The main weakness is top-line consistency: revenue growth has been choppy (declines in 2020 and 2023, flat in 2022/2024, then a sharp jump in 2025), which raises questions about durability of the growth profile.78
Positive
Balance Sheet
The company shows strong profitability on shareholder capital (return on equity mostly ~26%–57%), supporting balance-sheet quality. However, leverage is meaningful: debt-to-equity has often been around or above 1.0 (notably 2021 and 2024), improving to ~0.94 in 2025 but still elevated versus more conservatively financed peers. Overall assets are stable, but the financing mix leaves less cushion if earnings soften.67
Positive
Cash Flow
Cash generation is solid, with free cash flow consistently positive and free cash flow typically covering a large portion of net income (~63%–79%), indicating earnings are reasonably backed by cash. Free cash flow growth is positive in 2024–2025, but has been volatile over the cycle (sharp declines in 2020 and 2022–2023). A notable watch item is that operating cash flow has been consistently below EBIT (coverage ~0.54–0.74), suggesting working-capital or cash-tax dynamics can weigh on cash conversion.71
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 58.75B | 62.40B | 60.44B | 65.81B | 62.80B |
| Gross Profit | 42.85B | 46.11B | 44.84B | 47.88B | 43.10B |
| EBITDA | 17.50B | 16.62B | 18.41B | 24.07B | 22.19B |
| Net Income | 12.30B | 8.28B | 11.50B | 12.42B | 13.93B |
Balance Sheet | |||||
| Total Assets | 100.82B | 101.80B | 90.47B | 88.15B | 92.32B |
| Cash, Cash Equivalents and Short-Term Investments | 15.49B | 17.32B | 10.51B | 9.77B | 13.03B |
| Total Debt | 31.67B | 36.35B | 30.78B | 26.54B | 32.55B |
| Total Liabilities | 62.89B | 65.64B | 57.20B | 56.14B | 63.97B |
| Stockholders Equity | 33.84B | 31.77B | 29.32B | 27.99B | 24.49B |
Cash Flow | |||||
| Free Cash Flow | 13.45B | 15.09B | 11.45B | 13.34B | 16.02B |
| Operating Cash Flow | 17.03B | 20.09B | 16.09B | 17.89B | 20.57B |
| Investing Cash Flow | -8.32B | -11.39B | -10.64B | -3.57B | -6.55B |
| Financing Cash Flow | -9.72B | -6.82B | -4.24B | -15.72B | -12.70B |
Roche Holding Technical Analysis
Positive
56.75
Price Trends
51.51
Positive
47.18
Positive
43.62
Positive
Market Momentum
1.50
Negative
67.05
Neutral
71.04
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RHHBY, the sentiment is Positive. The current price of 56.75 is above the 20-day moving average (MA) of 54.11, above the 50-day MA of 51.51, and above the 200-day MA of 43.62, indicating a bullish trend. The MACD of 1.50 indicates Negative momentum. The RSI at 67.05 is Neutral, neither overbought nor oversold. The STOCH value of 71.04 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for RHHBY.
Roche Holding Peers Comparison
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $273.69B | 14.59 | 39.51% | 3.12% | 1.59% | 58.02% | |
80 Outperform | $282.34B | 20.13 | 32.93% | 2.87% | 11.53% | -15.21% | |
79 Outperform | $288.71B | 30.56 | 21.73% | 1.70% | 12.95% | 44.28% | |
78 Outperform | $176.11B | 21.99 | 40.53% | 2.52% | 2.76% | 6407.19% | |
73 Outperform | $362.18B | 23.69 | 39.72% | 1.63% | 7.26% | -8.64% | |
69 Neutral | $113.72B | 13.02 | 6.76% | 4.58% | -9.32% | 120.62% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% |
* Healthcare Sector Average
RHHBY
Roche Holding
56.75
18.23
47.31%
AZN
AstraZeneca
92.77
24.34
35.57%
GILD
Gilead Sciences
141.95
46.25
48.33%
MRK
Merck & Company
110.27
14.10
14.66%
NVS
Novartis
148.68
46.31
45.23%
SNY
Sanofi
47.04
-4.66
-9.02%
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.