Roche RO.SW
What does Roche do?
Roche is a Swiss healthcare group based in Basel and one of the world's largest pharmaceutical and diagnostics companies. The business is divided into two divisions: Pharmaceuticals and Diagnostics. The pharmaceuticals division develops and markets prescription drugs, mainly in oncology, neurology, immunology, ophthalmology and rare diseases. Customers include hospitals, physicians, pharmacies, and public and private payers.
The diagnostics division supplies laboratory tests, analyzers and digital solutions for the early detection, diagnosis and treatment monitoring of diseases. A large share of revenue here comes from consumables used continuously on installed instruments. Competitively, Roche benefits from combining both divisions, which enables personalized medicine: diagnostic tests help identify suitable patients for targeted therapies. The company also has high research intensity, a broad product pipeline and biotechnology expertise, partly through its stake in Genentech. Competitors are other large groups in the pharmaceutical and diagnostics industries.
Score profile
Rank vs. Drug Manufacturers - General (15 companies). 10 = top of the group, 5 = middle. Calculated from the metrics below, without AI.
Metrics compared with the industry
On profitability and quality, Roche ranks above average in the group Drug Manufacturers - General (6.7/10). On growth, the company ranks below average in the group Drug Manufacturers - General (2.8/10). On valuation (higher = cheaper), the stock ranks in the middle in the group Drug Manufacturers - General (4.6/10). On financial strength, Roche ranks below average in the group Drug Manufacturers - General (3.9/10).
| Metric | Stock | Group median | Ranking |
|---|---|---|---|
| Forward P/E | 18.6x | 16.4x | better than 23 % |
| Trailing P/E | 26.8x | 32.3x | better than 65 % |
| PEG ratio | 1.8x | 3.3x | better than 82 % |
| EV/EBITDA | 14.8x | 13.4x | better than 37 % |
| Price/sales | 5.2x | 4.4x | better than 43 % |
| Price/book | 10.0x | 6.8x | better than 25 % |
| Revenue growth | -1.2% | 5.6% | better than 10 % |
| Earnings growth | -7.7% | -5.3% | better than 46 % |
| Gross margin | 74.2% | 74.2% | better than 50 % |
| Operating margin | 36.2% | 34.3% | better than 70 % |
| Net margin | 19.6% | 15.7% | better than 77 % |
| Return on equity | 38.1% | 20.0% | better than 70 % |
| Debt/equity | 90.7% | 119.9% | better than 57 % |
| Current ratio | 1.2x | 1.4x | better than 30 % |
| Free cash flow yield | 3.2% | 4.4% | better than 30 % |
| Dividend yield | 2.4% | 2.2% | – |
| Payout ratio | 63.9% | 60.8% | – |
| Beta | 0.32 | 0.37 | – |
Valuation: what is Roche worth?
Two valuation approaches – a discounted cash flow model and a valuation at the industry’s median multiples – give Roche a model range of 186.96 CHF to 368.26 CHF per share.
The full DCF matrix, the reverse DCF (what growth the price implies) and scenarios are part of the Pro analysis.
What the business depends on
- The success of patent-protected drugs, particularly in oncology, determines the majority of revenue and earnings.
- New active ingredients from in-house research and acquisitions help replace products losing exclusivity over the long term.
- Recurring revenue from test consumables on installed analyzer systems stabilizes the diagnostics business.
Risks
- Patent expiries and the market entry of biosimilars can significantly reduce sales of established core products.
- Clinical trials can fail or approvals can be delayed, which devalues high development investments.
- Pricing pressure and regulatory intervention by healthcare systems, as well as currency fluctuations, weigh on margins and reported results.
What to look for with Roche
The share of revenue from new products relative to expiring ones is informative, as it shows how well the pipeline offsets patent losses.