We’re now a year past the onset of the pandemic, and the efficacy of both vaccinations has been proven well enough. Adding flu season on top is a deadly combination for a lot of people, and these pharmaceutical leaders could be essential businesses for decades to come.
But when considering Pfizer stock vs Moderna, which is the best investment for your portfolio?
For investors, the key is to examine both drug companies and the broader industry: how the U.S. government’s Operation Warp Speed (OWS) funding is being used, along with where they’re testing worldwide.
In addition, it’s important to understand what other products the companies sell. They’ll be leaning on more than COVID-19 treatments for revenue growth over the next decade. First out of the blocks is Pfizer.
Pfizer Revenues Are Down… For Now
Pfizer’s proposed coronavirus vaccine was developed in partnership with German pharmaceutical company BioNTech and contains messenger RNA meant to strengthen the immune system’s response to the SARS-CoV-2 virus.
It’s in late-stage clinical trials with the Federal Drug Administration (FDA), meaning it’s actively being tested on patients with and without the disease, alongside a placebo.
The patient group includes both infected and noninfected people, and it’s filing for an emergency use authorization before the end of the year.
Besides the vaccine, Pfizer’s third-quarter sales were down by 4.3 percent. This was caused by fewer people buying its range of drugs during the pandemic.
Sales of $12.12 billion fell short of analyst expectations and were also down compared the same quarter in 2019, when the company generated $12.68 billion in revenue. This came out to $0.72 adjusted profits per share, giving the company a rocky road at the end of the year.
But 2020 is just the beginning of the coronavirus, and the company’s shareholders are getting stock in Upjohn, which Pfizer is spinning of to merge with Mylan.
These vaccines are expected to truly get into widespread usage in 2021 and beyond. Because it has such a large manufacturing capability, Pfizer is not only creating its own vaccine, but it could find itself manufacturing competing candidates from smaller companies, should they get approval.
Are Moderna Insiders Signaling Good News?
Moderna beat Pfizer and the rest of the pack to late-stage human trials. This led to the company becoming the mascot for COVID vaccines at the onset of the pandemic. However, the company still hasn’t proven efficacy in its candidate, which also uses mRNA from the coronavirus to trigger the body’s protein response.
Unlike Pfizer, it’s not an established biotechnology company from generations past – its December 2018 IPO valued it at $7.5 billion though, and it grew to a market cap over $30 billion in the summer of 2020 before settling in the $25 billion to $30 billion range.
The company received $483 million from the Department of Health and Human Services (HHS) in April and gave it another $472 million in late July to provide another $472 million for late-stage development. This compares to the $1.95 billion given to Pfizer, which has a much more expansive supply chain. Still, trading of insiders suggests the company sees positive results in the data it has on hand.
If you’re investing in Moderna, the timing matters. You’ll need to get in before it receives FDA approval, assuming it does. In fact, let’s look at the risks in these stocks.
Pfizer Stock Struggling In A Pandemic: Why?
Pfizer’s overall revenue is down which is not a good sign for a healthcare company during a pandemic, no matter how you slice it.
The company’s market cap was turbulent as investors weren’t sure what to expect through each quarter since the initial shut down orders were issued.
It also has to split its profits with BioNTech, showing that it wasn’t prepared for the SARS outbreak, despite several variants of the virus existing for decades prior.
Even if the company’s vaccination is approved, it’s not guaranteed to bring in sales. It’s being released in a highly competitive niche where other vaccines manufacturers are all vying to become first to market.
Besides the 100 million doses it provides the government (which are prepaid for), it doesn’t have any secured sales yet, and it still has to work through the expensive approval processes in different countries. These expenses will surely tug on the bottom line, along with the loss of its Upjohn sales.
However, its dividend yield of 4 percent is worth looking at for some investors who are less concerned about short-term share price and more concerned with long-term dividend income.
Dangers of Investing in Moderna
Like Pfizer, Moderna needs its COVID vaccine to be a winner, and even that isn’t a guaranteed win. Unlike Pfizer, the company has pretty much everything riding on the concept of mRNA.
If these vaccines don’t prove effective, it’s going to be a while before it finds one that is. No mRNA treatment had been approved for any disease as of mid 2020.
If the vaccine fails, the company’s share prices are going to take a nosedive. However, if it succeeds, it could also find itself overweight. Even if buying Moderna, you’ll need a solid strategy to ensure your risk is mitigated.
That might involve buying puts alongside any share purchases as a form of “insurance policy.”
Moderna Stock Vs Pfizer: The Bottom Line
Modern and Pfizer are leading the race to find a coronavirus vaccine using mRNA-based treatments. These unproven drugs are promising so far, but they could prove ineffective during a long flu season.
Pfizer has other drugs to lean on and could buy out another smaller company or even manufacture white label for whichever vaccines win. Moderna has a lot more on the line, which makes it a higher risk but higher growth opportunity.
Which you choose depends on your specific investment portfolio and risk tolerance. Conservative-minded investors will fair better with Pfizer while risk-seeking investors can run the gauntlet with Moderna.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.