What’s going on?
Roche, the world’s second-biggest pharmaceutical company, released a largely positive third-quarter update on Thursday – but investors found it a bitter pill to swallow.
What does this mean?
Roche’s revenue would have come in 1% higher than the same time last year, but the rising value of its native Swiss currency reduced what overseas (and, indeed overland) sales were worth when brought back home. Revenue instead worked out 5% lower than a year ago – potentially rattling investors, who sent the company’s stock down 3%. Still, Roche’s du jour diagnostics business (which sells COVID-19 testing kits) continued to grow, with sales there up 2%. And even with the aforementioned “currency headwinds”, the firm confirmed it’ll rake in about as much this year as previously promised – which might bode well for rival diagnosticians Abbott Laboratories and acquisition-tastic Siemens Healthineers.
Why should I care?
The bigger picture: Supposition or suppository?
Diagnostics-focused pharma firms haven’t been investors’ number-one priority recently, given the understandable attention paid to Big Pharma’s attempts to develop a coronavirus vaccine. But that laser focus has its drawbacks: fair-weather investors quickly grew skittish when companies like AstraZeneca (last month) and Johnson & Johnson and Eli Lilly (this week) announced pauses to clinical vaccine trials in response to patient illnesses. Temporary setbacks are par for the course with new treatments – but Eli Lilly’s 3% drop after its announcement suggests investors were hoping the drugmaker would follow a smoother path.
Zooming out: From farm to table.
Drugstore chain Walgreens Boots Alliance announced stronger-than-predicted quarterly results on Thursday. That was partly thanks to the pandemic boosting sales of health and wellness items – including, perhaps, Stateside sales of Roche’s or rivals’ test kits. International revenue was a little queasier, however: sales fell as Boots stores were shuttered. Nevertheless, there was more good than bad – and Walgreens’ stock rose 3%.
Originally Posted on October 15, 2020 – A Spoonful of Sugar
Disclosure: Interactive Brokers
Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from Finimize and is being posted with permission from Finimize. The views expressed in this material are solely those of the author and/or Finimize and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.