What To Expect From Roche Holding’s Q4?

by Trefis Team
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Roche Holding (NASDAQ:RHHBY) is scheduled to announce its Q4 earnings on January 31, and we expect the company to post steady top line and earnings growth, primarily led by Ocrevus. This relatively new drug has seen a strong growth in the recent quarters, and will likely generate $2 billion in sales for the full year. However, Oncology could see slow growth, given generic headwinds for Rituxan in Europe. We have created an interactive dashboard ~ What Is The Outlook For Roche Holding ~ on the company’s expected performance for the full year 2018 and 2019. You can adjust various drivers to see the impact on the company’s adjusted earnings, and price estimate.

Expect Neuroscience Drugs’ Revenue To See Strong Uptick While Oncology Will Likely See Slow Growth

We forecast Roche’s Neuroscience, Metabolism & Other Drugs segment revenues to see strong growth in Q4, and beyond. For the full year 2018, we estimate the segment revenues to grow in mid-twenties (percent) to north of $6.6 billion. This can primarily be attributed to its new drug Ocrevus, which garnered around $1.5 billion in sales in the nine month period ending September 2018, marking Roche’s best drug launch ever. Ocrevus is used for the treatment of relapsing and primary progressive forms of multiple sclerosis. The patient pool for Ocrevus was at 70,000 in the previous quarter, with a 12% market share in the U.S.  Ocrevus will likely be a key player in the multiple sclerosis segment, and could garner as much as $5 billion in peak sales. Looking at the gross margins, they have remained stable at around 80% over the past few years, and we don’t expect any significant change in the near term.

Oncology revenues will likely see slow growth in the near term, as ramp up in new drugs, such as Tecentriq, Kadcyla, Gazayva, and Alecensa, will mostly be offset by decline in older drugs, primarily Rituxan, which faces generic competition in Europe. In fact, Rituxan sales were down close to 50% in Europe for the nine month period ending September 2018. Note that Rituxan is a blockbuster drug for Roche, with sales of over $7 billion in 2017. Looking at In-Vitro Diagnostics, we expect the growth to be in mid-single digits to around $12.7 billion for the full year 2018. This can primarily be attributed to its lab business, which has been doing well of late. The company’s diagnostics business has been doing well in the emerging markets, and we expect this trend to continue in the near term.

Overall, we forecast the full year 2018 revenues to grow in mid-single digits to $58 billion, and earnings to be around $2.15 per share, reflecting a growth in the low teens. We currently have a $35 price estimate for Roche Holding, which we will update post the Q4 earnings announcement.

 

 

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