Roche Holding AG (RHHBY) — founded in 1896 — is one of the world’s leading healthcare companies with products spanning the healthcare spectrum, from early detection and prevention of disease to diagnosis and treatment, explains Ingrid Hendershot, money manager, value investing expert and editor of Hendershot Investments.
The company offers differentiated products in oncology, immunology, infectious diseases, ophthalmology and diseases of the central nervous system. It is also a world leader in tissue-based cancer diagnostics, in vitro diagnostics and a frontrunner in diabetes management.
Combining strengths and expertise of its two divisions, Pharmaceuticals and Diagnostics, Roche plays an increasingly important role in shaping the future of personalized healthcare to deliver clinically differentiated drugs. Much of Roche’s leadership in pharmaceuticals stems from its $47 billion Genentech acquisition in 2009.
Roche responded quickly and broadly to the pandemic. Within hours of receiving regulatory approval for its SARS-CoV-2 PCR test in March 2020, Roche sent test kits, which run on its high-volume fully automated diagnostic systems, to major hospitals and laboratories around the world.
In February 2021, Roche received emergency use authorization for its Rapid Antigen Nasal home test that identifies highly infectious people in 15 minutes.
Further, Roche’s drug to treat rheumatoid arthritis has been adopted by many countries to treat severely ill COVID-19 patients and, in August 2020, Roche announced a partnership with and distribute its investigational neutralizing antibody cocktail.
Roche generated healthy growth during the past five years with revenues compounding at a 7% annual rate as net income and EPS each grew at a solid 14% annual pace. Roche’s profitable operations consistently deliver double-digit net profit margins and returns on shareholder equity exceeding 30%.
For the first quarter, Roche reported a 3% increase in constant currency sales growth. For the full 2021 year, sales are expected to grow in the low- to mid-single digit range on a constant currency basis with core EPS targeted to grow in line with sales.
Roche recently announced a 1% increase in the dividend, marking the 34th consecutive year of dividend growth. The current dividend yields an attractive 2.8%.
Long-term investors seeking a profitable prescription should consider Roche Holding AG, a high-quality market leader with profitable growth and a healthy balance sheet. Buy.