Will Roche’s Stock Rebound After A 4% Fall Following Its H1 Results?

The stock price of Roche Holding’s ADR (OTMKTS:RHHBY) reached its all-time high of $48 just last week, before a recent sell-off in the stock, which led to over a 4% drop in its price to levels of $46 currently. Much of this fall came in late last week after the company announced its H1 results. Roche reported sales of $30.7 Bil Swiss Francs, better than the street estimates of $29.9 Bil Swiss Francs, led by continued growth in its diagnostics business, courtesy of the company’s Covid-19 tests. However, the company also cautioned about a decline in diagnostics sales due to lower testing demand for Covid-19 going forward. Furthermore, despite a solid H1, the company didn’t revise its guidance upward. All of these factors impacted the stock price move for Roche.

Now, after a 4% fall in a week, will RHHBY stock continue its downward trajectory over the coming weeks, or is a recovery in the stock imminent? According to the Trefis Machine Learning Engine, which identifies trends in the company’s stock price using ten years of historical data, returns for RHHBY stock average 3% in the next one-month (twenty-one trading days) period after experiencing a 4% drop over the previous week (five trading days), implying that the RHHBY stock can see higher levels from here. Also, Gantenerumab – Roche’s treatment for Alzheimer’s disease – remains an important trigger for the company going forward. Roche is in discussions with the U.S. FDA, and if approved, it will be set to become yet another blockbuster drug for Roche.

But how would these numbers change if you are interested in holding RHHBY stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test Roche stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just 1 day!

MACHINE LEARNING ENGINE – try it yourself:

IF RHHBY stock moved by -5% over five trading days, THEN over the next twenty-one trading days RHHBY stock moves an average of 3%, with a good 67% probability of a positive return over this period.

Some Fun Scenarios, FAQs & Making Sense of Roche Stock Movements:

Question 1: Is the average return for Roche stock higher after a drop?

Answer: Consider two situations,

Case 1: Roche stock drops by -5% or more in a week

Case 2: Roche stock rises by 5% or more in a week

Is the average return for Roche stock higher over the subsequent month after Case 1 or Case 2?

RHHBY stock fares better after Case 1, with an average return of 2.9% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 0.1% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how Roche stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer: If you buy and hold Roche stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For RHHBY stock, the returns over the next N days after a -5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

You can try the engine to see what this table looks like for Roche after a larger loss over the last week, month, or quarter.

Question 3: What about the average return after a rise if you wait for a while?

Answer: The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.

It’s pretty powerful to test the trend for yourself for Roche stock by changing the inputs in the charts above.

While Roche stock looks like it can gain more, 2020 has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Mettler vs Abbott.

See all Trefis Price Estimates and Download Trefis Data here

What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For CFOs and Finance Teams | Product, R&D, and Marketing Teams