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Roche forecasts higher earnings after 2014 EPS misses estimates

[LONDON] Roche Holding AG, the world's biggest seller of cancer drugs, forecast that revenue and profit will increase in 2015 after last year's earnings missed analysts' estimates.

Sales will increase by a "low to mid-single digit" percentage and core earnings per share growth will exceed that, Basel, Switzerland-based Roche said in a statement today. Earnings per share excluding some items, which Roche calls core net income, came to 14.29 francs, below the 14.71-franc average of 24 analyst estimates compiled by Bloomberg.

The drugmaker has recently faced setbacks including a failed study on combining two of its newer drugs, Kadcyla and Perjeta, to treat breast cancer, and poor results for the experimental Alzheimer's medicine gantenerumab. Even so, it has promising new drug candidates for leukemia, hemophilia A and lung cancer.

"Roche remains a solid oncology play with a venerable track record in this important therapeutic area," Tim Anderson, an analyst at Sanford C. Bernstein & Co, said in a note to investors before the earnings announcement.

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Switzerland's central bank on January 15 unexpectedly scrapped its three-year-old policy of capping the franc at 1.20 euros. While Roche Chairman Christoph Franz has said the impact will be "limited," as less than 20 per cent of the company's costs are in francs, the shares have declined about 10 per cent since the bank's announcement.

Sales climbed 1 per cent last year to 47.5 billion francs, beating the average estimate of 47.1 billion francs. Roche proposed raising the dividend by 3 per cent to 8 francs a share. The company's sales and profit forecasts are at constant exchange rates.

While Roche is best known for cancer drugs such as Avastin and Herceptin, the company is expanding in other disease areas such as Alzheimer's and has said it's seeking more acquisitions to fill gaps in its portfolio.

Roche said this month it will take a US$1 billion majority stake in Cambridge, Massachusetts-based Foundation Medicine Inc. to gain genetic tests for screening tumours and to develop a new generation of cancer drugs.

Roche declined 4.7 per cent including reinvested dividends since the end of 2014, compared with a 12 per cent return for the Bloomberg Europe Pharmaceutical Index.