The CEO Severin Schwan of Roche said yesterday in a Bloomberg TV interview in relation to its Q1 revenue figures that a 12-18 months target for a COVID-19 vaccine is very ambitious and history shows it often takes longer time. It’s often the large scale manufacturing that’s the problem and especially for a global market. He also teared apart the current antibody tests for immunity as faulty because they had been rushed to market with too little testing while touting its own test coming to the market in early May as being better tested and more reliable.
Schwan also sounded negative on testing capabilities and that widespread mass testing of new cases of COVID-19 was almost impossible due lack of infrastructure. His expectations on a good COVID-19 vaccine was in our view much more pessimistic than what the market is currently pricing in equities and we are quite surprised that the market hasn’t taken more notice of this. The V-shape recovery camp will have a hard time if a vaccine is not coming fast.
Roche’s Q1 revenue figures yesterday showed the company’s diversified portfolio of drugs and businesses had been resilient so far in 2020 and the company also confirmed its 2020 outlook which is rare given how many companies are abandoning their guidance. With the current free cash flow generation and enterprise value of CHF 304bn the company is offering a 5% free cash flow yield which is impressive for a business with almost zero net debt. The shares closed at an all-time high in today’s session.