ROCHE: Solid investment in "difficult" times!

You know it, we know it: The share or the participation certificate of the Basel-based pharmaceutical group ROCHE - and/or the share of Novartis - belong in every well-positioned portfolio! We opted for this rather conservative recommendation on January 11, especially in view of the recession risks. Even though the non-voting equity security is currently trading below its cost price, including a dividend payout of CHF 9.50 (ex-date March 16), we are convinced that ROCHE will stay on track even without "Corona support". However, after a steady increase in sales from CHF 46 bn to over CHF 63 bn, it is no more than normal that the revs can be somewhat lower, or even a slight decline seems possible for the current year due to the discontinuation of the Corona income. We will soon see what the new CEO Thomas Schinecker can and will achieve. Various key figures have already been communicated: ROCHE intends to invest more in research and development in the current year; in concrete terms, the increased expenditure should lead to a total of around CHF 15 billion. In addition, there will be no job cuts in 2023; on the contrary, jobs will even be created. Last but not least, the company also wants to strengthen its position in the digital sector. And the talent scouts are searching worldwide for the best people for research, as is customary at ROCHE. According to Schinecker, no cost-cutting programs are planned.

For the time being, profits are likely to shrink somewhat to the same extent as sales, but the profit margin should be maintained, Schinecker adds. After all, the margin in ROCHE's pharmaceuticals division is 42.1%. The new CEO also explains the risks: Only one in ten drugs makes it to the patient, the others fail in research . And the development costs amount to an industry average of around CHF 2.6 billion, which is definitely no mean feat. An important "pipeline catalyst" is expected between 2024 and 2026! So we are positioned. Target price: CHF 333!