Performance in fiscal 2018
In fiscal 2018, Roche Holdings (RHHBY) reported total sales of 56.8 billion Swiss francs, a YoY rise of 7% on a reported basis as well as on a CER (constant exchange rate) basis. According to the company’s fourth-quarter earnings conference call, the company reported a 19% YoY rise in core EPS and an 8% YoY rise excluding benefits associated with US tax reforms. In fiscal 2018, the company paid a dividend per share of 8.70 Swiss francs and expects to further hike dividends in the future.
In fiscal 2018, Spark Therapeutics (ONCE) reported revenues of $64.72 million, a YoY rise of 436.43% but short of the consensus estimate by $15.21 million. The company also reported a diluted loss per share of $2.11, a YoY improvement of 72.35% but lower than the consensus estimate by $0.65.
According to Roche Holdings’ fourth-quarter earnings conference call, in fiscal 2018, the company reported a negative revenue impact of 1.2 billion Swiss francs associated with the entry of biosimilars for Herceptin and MabThera. However, recently launched drugs managed to offset this impact by reporting sales of CHF 3.2 billion in fiscal 2018. The addition of Spark Therapeutics’ commercialized asset, Luxturna, to Roche’s portfolio may further reduce the impact of generic revenue erosion of Roche Holdings in future years.
Analysts’ recommendations and target price
The 12-month consensus recommendation for Roche Holdings is a “buy,” while that for Spark Therapeutics is a “hold.” Of the three analysts covering Roche Holdings, one recommends a “strong buy,” one recommends a “buy,” and one recommends a “hold.” Their 12-month target price is $34.03, 1.66% lower than its last closing price on February 25. The highest target price estimate for the company is $36, and the lowest is $31.
On the other hand, four analysts have rated Spark Therapeutics as a “strong buy,” two have rated it as a “buy,” and 16 have rated the company as a “hold.” Their 12-month target price is $77.44, 31.76% lower than its last closing price on February 25. The highest and the lowest target price estimate for the company is $114.5 and $42, respectively.
Next, we’ll look at the anticipated revenue contribution of Spark Therapeutics to Roche Holdings after completion of the deal.