Which Covid Vaccine Stocks To Buy? The efforts to inoculate the world’s population against the COVID-19 virus has refocused attention on the companies at the forefront of this herculean task.
Here we’ll take a brief look at some of the stories behind those companies, and why they may, or may not, make for a good investment.
Moderna: Cash Flow Negative To $2 Billion In Months
Moderna didn’t have a single commercialized therapeutic product on its books prior to the outbreak of the coronavirus pandemic. It was cash flow negative and desperately needed a proof-of-concept event to justify its decade-long research into messenger RNA-based vaccine platforms.
Its efforts were rewarded, however, in December last year, when FDA approval for its COVID-19 candidate, mRNA-1273, was granted emergency use status – and the firm hasn’t looked back since.
Moderna Expects A Massive Boon In Revenues
Orders for Moderna’s vaccine have been rolling in, and the company expects to generate around $18.5 billion of revenue from approximately 1 billion doses of its product in 2021. And that negative cash flow is now positive to the tune of $2.0 billion.
Furthermore, Moderna has a huge pipeline of other products at various stages of the FDA development and approval process.
Its program is targeting treatments for diseases such as Flu, HIV and Nipah, and the company also has aspirations to create personalized intratumoral immuno-oncology vaccines for cancer patients.
Moderna Price-To-Sales Multiple Set To Plunge
While Moderna’s year-on-year revenue growth rate was a staggering 1,234% over the past 12-months, the company expects this to fall by more than a half to 508% over the coming fiscal year.
Additionally, Moderna’s current price-to-Sales ratio is valued at a multiple of 67x right now, and this is forecast to fall to just over 3x for the next fiscal period. Taking a pessimistic outlook here means that the market is willing to pay a premium for Moderna stock today, but will not be willing to do so in the future.
That said, the contraction in its sales ratio could just be down to higher predicted revenue numbers. Either way, it’s certainly something to keep in mind.
Pfizer Vaccine Among The Most Effective
Pfizer developed its COVID-19 vaccine in partnership with fellow pharmaceutical company BioNTech, and together they were among the first drug manufacturers in the world to win approval for their product’s use against the novel coronavirus.
The shot subsequently proved its worth in later clinical assessment studies and is now one of the most efficient vaccines against COVID-19 on the market.
Pfizer Price Per Vaccine Shot Around $20
Although the exact price per vaccine can vary between countries, Pfizer has negotiated a fairly good – meaning high – price for its COVID jab, with an average shot costing around $20. This isn’t as expensive as Moderna’s at roughly $35 a go, but it’s significantly higher than AstraZeneca’s at just $3 to $4 per vial.
And given this pricing structure it’s no surprise that Pfizer executives have predicted sales of $15 billion going into 2021.
But for the savvy investor, Pfizer’s attraction doesn’t just lie in its ability to drum up revenues from its COVID-19 operations; owners of the company stock also enjoy a high dividend yield which is easily double the average you would get from the S&P 500.
Pfizer Drug Portfolio Is Massive
One drawback concerning Pfizer is the somewhat lackluster performance of its non-COVID drug portfolio.
Its revenues were practically flat from 2019 to 2020, growing from just $41.1 billion to $41.9 billion respectively. And, many of its individual products had negative growth rates over that period too.
Indeed, just seven of Pfizer’s assets accounted for well over 50% of its revenues in fiscal 2020 – and Pfizer has a large portfolio; much larger than its sector competitors AbbVie (ABBV) and Bristol Myers.
Johnson & Johnson Vaccine A Leader…. Initially
In the race to create a viable COVID-19 vaccine it soon became apparent that Johnson & Johnson’s eventual solution stood out as a market leader in two important ways.
First, it could be administered as a single shot, unlike Pfizer, Moderna and AstraZeneca’s two-dose offering; and, second, its stability at normal refrigeration temperatures made it easier to transport and store.
Johnson & Johnson Is A Dividend Aristocrat
Johnson & Johnson (JNJ) is the world’s largest pharmaceutical company, with total revenues over $82 billion and a gross profit of $54 billion. It’s fair to say that it’s not a growth company like many others in the biotech scene, but, the firm is a Dividend Aristocrat, which, atypical for the sector, is certainly something it’s got going in its favor.
The company also grew its overall revenues during the coronavirus crisis despite a 10% drop in its Medical Devices division, as headwinds from the fall in hospital admissions over this time meant that its second largest cash generator naturally took a hit.
However, with medical services on track to return to normal, investors are expecting a solid revenue bump in 2021 which should factor into a share price run-up.
Johnson & Johnson Vaccine Under Investigation
Adverse events surrounding the Johnson & Johnson vaccine began to break recently in the US media, and government overseers are currently suggesting a moratorium on its use.
How this will affect confidence in the product remains to be seen, although a delay was announced in its planned rollout of the jab in Europe, which is a definite setback for the company.
Novavax Fortunes Are Changing Positively
Novavax was the “outsider“ in the coronavirus vaccine wars: an unsuccessful experimental vaccine company that hadn’t yet struck it lucky until the outbreak of the COVID-19 crisis in 2020.
And now, with a deal to provide over 1 billion vaccine shots for the Vaccine Alliance, the firm’s fortunes appear to be on the up.
Novavax Polyvalent Vaccines Have Wide Applications
One of the most troubling aspects in the fight against COVID-19 was the appearance of multiple mutant strains of the original virus, which, though not unpredictable, proved to be a psychological and clinical knock-back just as things were beginning to look up.
However, it seems that Novavax has come to the rescue. Despite being one of the smaller players in the inoculation game, it turns out that its vaccine is particularly effective against the so-called South Africa variant, and several other variants too.
Furthermore, Novavax’s vaccine is special in that individual doses can easily be altered to become polyvalent vaccines, meaning that just one shot can protect against a multitude of variant types.
Could this unique selling point be Novavax’s ace in the hole?
Novavax Approval Still On The Horizon
Throwing cold water on Novavax’s achievements so far seems unfair, but it has to be noted that the company still hasn’t received regulatory approval for its vaccine yet. And everything rests on this.
Its current valuation is based on the realization of its sales deals, and with the vaccine market expected to shrink from $39 billion to $13 billion in the two years, a question mark still hangs over its long-term growth prospects.
AstraZeneca Early Advantage Halted Quickly
Being one of the first drugs to receive approval for use against the COVID-19 virus, and its high-profile role in the UK’s rapid and successful vaccination program, AstraZeneca gained a huge first mover advantage and some early good publicity.
But the company has faced some stiff headwinds lately, with criticism coming from the European Union over broken contract promises, and the recent blood clot scandal all taking their toll.
AstraZeneca Stock May Be Undervalued
AstraZeneca stock has seen a pullback since its July 2020 highs, and there’s a good argument that the company is now a solid straight up value play in both the COVID-19 and pharmaceutical space.
Its revenue growth across all sectors of the business is good, with its largest division, oncology, up 23% last year. It has an attractive gross profit margin of over 80% too, which beats the industry average of 55% by quite some margin.
AstraZeneca Vaccine Efficacy A Lingering Question
In addition to the negative press stories surrounding AstraZeneca’s business dealings and its vaccine’s side-effects, there’s still some uncertainty about just how efficacious the jab actually is.
Some estimates put it at 60% effective, which, in such a highly competitive and innovative field, might put the firm at a disadvantage in later rounds of contract negotiation.
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.