Intro
Roche is a more than 125-year-old pharmaceutical and diagnostics company with its head office in Switzerland. The majority of the bearer shares is still in the hands of the heirs of the company’s founder. That being said, there are also non-voting equity securities (NES) outstanding (see ticker symbol above). Both share classes are listed with the NES showing significantly higher trading volume.
Valuation
Probably due to some disappointments in R&D, ceasing of Covid-related profits in the diagnostics segment and different capital structure due to purchase of Novartis’ stake in Roche in 2021, the price of the NSE has come down by around 30%. Let’s see if we can find some value in here after the price drop:
Core EPS (excluding for instance some global restructuring plans, amortization and impairment of goodwill and intangibles) has been around CHF 20 per security, which translates into a Core P/E of around 14x, which seems not very demanding for a high-quality business as Roche with its full pipeline.
With the announcement of its full year results this year, the company also reported its 36th consecutive annual dividend increase – what a run! Current yield is around 3.4% and for 2023, Roche is guiding for a further increase in its dividend.
What’s next?
Roche has been a very steady and long-term oriented company. Although I cannot judge its pipeline, it seems to be quite interesting with further news flow expected in 2023. A company not to get rich with quickly, but a sound investment in a difficult market paying solid dividends and showing good potential.
Current Price
CHF 279.20 per non-voting equity security
Disclosure
The author is currently not long Roche; however, his close relatives have some exposure.