Morningstar

Perjeta Nicks Roche’s Fair Value Estimate

Though we’ve slightly reduced our fair value estimate, we see Roche’s wide economic moat as stable, given the firm’s dominance in branded cancer therapies and in vitro diagnostics globally.

Securities In This Article
Roche Holding AG ADR
(RHHBY)

While we previously lowered our estimates for Tecentriq in bladder cancer following the lack of an overall survival benefit over chemotherapy in the Imvigor 211 study, our valuation is more closely tied to Tecentriq’s potential in lung cancer, where reported data has remained strong, and this did not materially affect our valuation. We remain bullish on upcoming catalysts (including data on hemophilia drug emicizumab in July, an expected strong launch for multiple sclerosis drug Ocrevus in coming quarters, and important lung cancer data for Tecentriq/Avastin/chemo in the third quarter), and the shares continue to look undervalued. We see Roche’s wide economic moat as stable, given the firm’s dominance in branded cancer therapies and in vitro diagnostics globally, as well as the potential increase in the intersection of these two markets.

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About the Author

Karen Andersen, CFA

Strategist
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Karen Andersen, CFA, is a sector director, AM Healthcare, for Morningstar*. In addition to leading the sector team, she covers biopharma firms in the US and Europe, focusing mostly on large-cap firms with foundations in biologic or gene-based medicines.

Before joining Morningstar in 2005, Andersen received a master’s degree in business administration from the Jones Graduate School of Business at Rice University, where she served as senior healthcare analyst for the M.A. Wright Fund and earned the distinction of Jones Scholar. She also holds the Chartered Financial Analyst® designation.

She ranked first in the biotechnology industry, and had the highest score overall, in The Wall Street Journal’s annual “Best on the Street” analysts survey in 2013, the last year the survey was conducted.

Andersen holds a bachelor’s degree in biochemistry from Rice University, where she graduated magna cum laude. She is also a member of Phi Beta Kappa. She has scientific research experience in academia at both Rice University and the University of Queensland in Australia. She also worked in the healthcare industry, both at genetic testing firm Integrated Genetics (now part of LabCorp) and as a research assistant at Lexicon Genetics (now Lexicon Pharmaceuticals).

* Morningstar Research Services LLC (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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