Roche: UBS no longer a buyer; oncology warning.
(CercleFinance.com) - This morning UBS abandoned its positive stance on the Swiss pharmaceutical giant Roche.
As such, the broker has downgraded its former buy rating to neutral, with a 12-month target price of 260 Swiss francs.
Analysts believe that the arguments backing their former buy rating are running out of steam: Roche stands out due to its high exposure to oncology. Its size gives it an advantage regarding clinical trials, especially since the profitability of this activity exceeds the average of pharma groups.
However, clouds obscure the horizon, says UBS, which has "become more cautious on oncology in general," particularly as the Roche stock seems close to its fair value.
Amongst risks highlighted, there is “Innovation indigestion in Europe and global over-investment in cancer R&D ". Indeed, UBS calculates that anti-cancer patients concentrate about 10% of global sales of drugs. However, " So far, in 2017, 40% of new clinical trials are cancer trials; a huge uptick even since 2016," its research report points out.
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The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.
As such, the broker has downgraded its former buy rating to neutral, with a 12-month target price of 260 Swiss francs.
Analysts believe that the arguments backing their former buy rating are running out of steam: Roche stands out due to its high exposure to oncology. Its size gives it an advantage regarding clinical trials, especially since the profitability of this activity exceeds the average of pharma groups.
However, clouds obscure the horizon, says UBS, which has "become more cautious on oncology in general," particularly as the Roche stock seems close to its fair value.
Amongst risks highlighted, there is “Innovation indigestion in Europe and global over-investment in cancer R&D ". Indeed, UBS calculates that anti-cancer patients concentrate about 10% of global sales of drugs. However, " So far, in 2017, 40% of new clinical trials are cancer trials; a huge uptick even since 2016," its research report points out.
Copyright (c) 2017 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.