Roche Holding AG

With durable competitive advantages, strong credit, and a well-stocked pipeline of new pharmaceuticals, Roche offers a 40% upside and a 7% annual return to investors willing to swallow this pill.

Rundown

• Company name: Roche Holding AG

• Ticker: RO (Swiss Exchange)

• Type: Common stock bearer shares (with voting rights)

• 52-week range: SFr341-439

• Market cap: SFr261bn ($271bn)

• Price: SFr367

• Target: SFr517

• Upside: +41%

• Recommendation: Add

I) Story

Business model

Roche is a Swiss pharmaceutical and diagnostics business. It makes money by developing drugs (73% of sales) and producing diagnostics instruments and chemicals (27% of sales).

Over 28m people are treated with Roche drugs each year, and 32 of the company's 40 main drugs are on the World Health Organisation's (WHO) list of essential medicines. The firm has 146 pills in its pipeline: 51 in phase three, 30 in phase two, and 65 in phase one.

The company has 100,000 diagnostics platforms in clinics, making it the world's most extensive diagnostics base. M…