Roche’s ADR To Outperform Post Coronavirus?

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Going by trends seen during the 2008 crisis, Roche Holdings ADR could potentially outperform the broader market, when the current crisis is over. We compare the performance of Roche vis-à-vis the S&P 500 in our interactive dashboard analysis, 2007-08 vs. 2020 Crisis Comparison: Roche Holdings ADR Compared with S&P 500So far, Roche’s ADR has outperformed the broader markets in the recent coronavirus and oil price war related market crash. The stock has declined 11% since early February, as compared to a 26% fall for the S&P 500. Roche’s ADR was doing well before the outbreak of coronavirus, and it was up over 20% in 2019, led by strong uptick in sales of its new oncology drugs. Now with the coronavirus outbreak, there are fears of recession in the global economy. Apart from pharmaceuticals, Roche also has a diagnostics business, which could be impacted by the slowdown in China, in terms of overall procedures performed, and supply chain issues for both diagnostics and pharmaceuticals segments. Having said that, Roche’s two devices ~ cobas 6800 and cobas 8800 received FDA approval on March 13 for testing the coronavirus. These devices have a very limited installed base of around 800 devices globally, with a capacity of 5,568 tests per device in a 24 hour window. The company is also aiming to supply 400,000 test kits per week. This will likely help offset decline, if any, in procedures arising from a slowdown in China. It should also be noted that roughly a quarter of Roche’s workforce is based out of Asia, primarily China and Japan.

On Thursday, March 12, the stock markets saw their biggest sell off since 1987’s Black Monday. While the markets saw a sharp recovery on Friday, March 13, it again saw sharp decline of around 13% on Monday March 16, marking one of the biggest decline ever for the U.S. markets. There were two distinct trends driving the sell-off. Firstly, the increasing number of Coronavirus cases outside China is causing mounting concerns of a global economic slowdown. Secondly, crude oil prices plummeted by more than 30% after Saudi Arabia increased production. Roche’s ADR fell 11% over the last 6 trading sessions, (between March 9, and March 16), and it is down the same, around 11%, since early February, considering the impact that the outbreak and a broader economic slowdown could have on the company’s businesses.

Roche’s ADR vs. S&P 500 Over 2020 Coronavirus/Oil Price War Crisis

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  • Roche’s ADR declined by about 11% between March 8, 2020 and March 16, 2020, and the stock is down by about the same 11% since February 1, after the WHO declared a global health emergency.
  • The S&P 500 declined by 20% between March 9, and March 16, and it has fallen by 26% since February 1.
  • In comparison, Merck’s stock is down 18%, Pfizer 19%, and Johnson & Johnson 14% since February 1.

View our analysis for 2007-08 vs. 2020 Crisis Comparison on MerckPfizer and Johnson & Johnson.

We also compare the current coronavirus crash to 4 other market crashes here.

Roche’s ADR vs. S&P 500 Over 2007-08 Financial Crisis

  • RHHBY ADR declined from levels of around $11 in October 2007 (the pre-crisis peak) to levels of around $8 in March 2009 (as the markets bottomed out) and recovered to levels of about $13 in early 2010.
  • Through the crisis, RHHBY ADR declined by as much as 32% from its approximate pre-crisis peak. This marked a narrower decline compared to the broader S&P, which fell by as much as 51%.
  • RHHBY stock saw strong recovery of around 62% between March 2009 and January 2010. The growth was much higher than the S&P, which rose by about 48% over the same period.

Conclusion

  • While Roche’s ADR has declined due to the coronavirus outbreak and oil price war crisis, going by trends seen during the 2008 slowdown, it’s likely that it could bounce back strongly, and potentially outperform the broader market, when the crisis winds down.

For more detailed charts and a timeline of the 2008 and 2020 crisis for different stocks, view our interactive dashboard analyses on coronavirus.

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