Roche managed to convince the market this morning when it announced its sales figures for the third quarter - the stock opened 1.4% higher than the previous days’ close. The return on sales in Q3 amounted to 11.94 billion CHF which was higher than the previous years figures (11.78 billion CHF) as well as the analysts’ expectations for this year (11.8 billion CHF). While the sales of the Diagnostics segment were slightly lower than one year ago (2.6 billion vs. 2.652 billion) the pharmaceutical divisions sales outweighed this decline by a much stronger increase (9.34 billion vs. 9.131 billion). Especially the newly approved drug Esbriet, which is used for the treatment of idiopathic pulmonary fibrosis (IPF), is seen by Roche’s management with high potential future sales. A slowdown in underlying demand is not expected. Roche raised its sales guidance for 2015 to “mid-single digits growth excluding currency effects” from “low- to mid- single-digits” previously. It also expects to further increase its dividend in Swiss francs.
During a conference call with analysts this afternoon, Roches’ CFO, Alan Hippe, announced that the currency effect hit the full year sales with 4 %. Furthermore, it was said that the price pressure coming from China is on old drugs but new drugs were not affected.
Roche shows that they are able to deject external influences with new products. With a number of promising new drugs in the pipeline, the company seems well equipped for the future. We maintain our Buy rating with a target price of 300 CHF. Roche was trading around 259 CHF in the afternoon.