Roche

Roche’s Q4 25 sales came in  c.1% and c.2% short of consensus and AV estimates, respectively, largely because of adverse FX movements.

Sales came in at CHF15.7bn, up 8% at constant exchange rates (CER) and c.1% reported, due to FX headwinds.

While the Pharmaceuticals segment (c.77% of sales; +9%) continued its healthy trajectory, Diagnostics (c.23%; +6%) returned to healthy growth this quarter.

For 2025, sales increased 7% (vs. management’s mid-single digit guidance) to CHF61.5bn, ‘core’ operating profit (COP) jumped c.13% to CHF21.8bn and ‘core’ EPS was up 11% (in line with management’s guidance of high-single to low-double digit range) to CHF19.5. The Board has proposed a dividend of CHF9.8/share, slightly lower than AV’s expectations of CHF10/share.

For 2026, the management expects sales and ‘core’ EPS to increase by mid-single digit and high-single digit range, respectively. The sales growth expectations (at CER) are somewhat higher than the market’s estimates of c.3% growth at actual exchange rates.

Overall, our model is under review, but we maintain our cautious stance on Roche, considering that the shares have had an impressive run in the last two years (+47%) and now we are left with limited upside on the firm. The 2026e P/E of c.16x is in line with the AV Big Pharma average. That said, Roche remains an innovation stalwart amongst the European Big Pharmas with market leading drugs in quite a few of its target areas and sits on a comfortable balance sheet cushion (2025e net debt-to-EBITDA of 0.8x).

We expect a positive share price reaction today.

Our reduce rating is based on limited upside. Our expert still sees Roche as a best in class company in the sector. The rerating started but the expected entry in the weight loss market is likely to further boost prospects. Still a stock to buy and hold over the long run.

Note that Sanofi (BUY, 42%) also posted results slightly better than consensus. Good surprise comes from the dividend which is marginally ahead of expectations and a €1bn SBB announced which was unexpected.