As we discussed earlier in this series, Roche (RHHBY) is a multinational pharmaceutical company focused on its Pharmaceuticals and Diagnostics businesses. From an investor’s point of view, forward PE[1. price-to-earnings] and EV-to-EBITDA[2. enterprise value to earnings before interest, tax, depreciation, and amortization] multiples are the two best valuation multiples to use when valuing Roche and other large pharmaceutical companies, given the relatively stable and visible nature of their earnings.
According to data generated on September 15, 2016, Roche’s stock has fallen ~6% over the last 12 months. Analysts estimate that the stock has the potential to return ~15% over the next 12 months.
Analysts’ recommendations show a 12-month targeted price of $35.10 per share compared to the last price of $30.52 per share posted on September 14, 2016. According to Bloomberg’s consensus, ~75% of the analysts recommend a “buy” for Roche (RHHBY), and 25% of the analysts recommend a “hold.” Changes in analysts’ estimates and recommendations are based on changing trends in the stock’s price.
Investors can consider the Vanguard FTSE Europe ETF (VGK), which holds ~2% of its total assets in Roche Holdings.