A Year Since Pfizer’s Big Breakthrough, Are Vaccine Stocks Still Worth Investing In?

It’s been almost a year since Pfizer (NYSE:PFE) published incredibly strong efficacy data from its phase 3 Covid-19 vaccine trials, setting the stage for one of the largest inoculation drives in history. Our theme of Covid-19 Vaccine Stocks has outperformed meaningfully since then, rising by about 115% over the last twelve months, compared to a return of just about 32% on the S&P 500 over the same period. The rally was largely warranted, given the urgency to contain the pandemic, the speed with which most players produced and distributed vaccines, and the stellar financial results that for-profit players such as Moderna (NASDAQ: MRNA) have posted in recent quarters. However, are vaccine stocks still worth a look for investors at this point?

More than 6.73 billion Covid-19 vaccine doses have been administered thus far worldwide, per the Bloomberg Vaccine Tracker. That’s enough doses to vaccinate about 44% of the global population. With vaccinations happening at a rate of about 30 million doses per day globally, and two doses required for most shots, there’s probably some more room to drive volumes for vaccine majors. Vaccines are also slated to be approved for children in the coming months and this could also be a near-term driver of sales. Moreover, the market for booster doses is also opening up as governments look to protect vulnerable populations from new variants of the virus and from the diminishing effect of initial doses.

However, there are risks as well. It’s likely that profitability in the vaccine space could diminish with time as populations in more lucrative developed markets are now largely vaccinated. New players are also set to enter the fray while existing players scale up capacity. For example, Novavax (NASDAQ: NVAX) has a cheap and highly effective shot that’s likely to be approved for use in the coming months. Covid-19 treatments are also poised to get much better. Pharma major Merck recently provided encouraging updates on its experimental oral Covid-19 drug, molnupiravir, indicating that it cut the risk of hospitalization or death by 50% for patients with mild-to-moderate Covid-19. The availability of highly effective treatment options could hurt vaccine demand as some people might be less inclined to get inoculated.

Overall, we’re reaching a juncture where the markets are looking past the Covid-19 pandemic. Vaccine revenue is likely to see little growth or no growth over 2022, per consensus revenue estimates for the likes of Moderna and Pfizer. We think investors will need to evaluate vaccine stocks based on the potential of their future pipelines and other drugs. Now the Covid-19 vaccine development and rollout has taken a lot of technologies mainstream. For example, the high efficacy of the mRNA technology used by Moderna and Pfizer’s partner BioNTech in their respective Covid-19 shots bodes very well for their other drugs targeting cancer and infectious diseases. Similarly, Novavax’s highly effective vaccine (which has yet to be commercially deployed) uses an adjuvant called Matrix-M to enhance the immune response. It’s likely that Matrix-M could be used in other vaccines as well. These developments and learnings from the Covid-19 pandemic should bode well for these companies in the long run.

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[5/3/2021] Why Have Vaccine Stocks Rallied Big Recently?

Covid-19 vaccine stocks have fared well over the last month. Moderna (NASDAQ: MRNA) and Pfizer (NYSE:PFE) – two leading Covid vaccine suppliers – have seen their stock prices rise by about 37% and 7% respectively since early April, while Novavax (NASDAQ: NVAX), which is likely to begin commercial deployment of its vaccine shortly, saw its stock gain 33%. So what’s driving the surge in these vaccine stocks?

Firstly, global Covid-19 cases have been trending significantly higher with daily new cases standing at over 800k over the last week, driven partly by infections in India and South America. This is likely causing an urgency to boost vaccination programs. Although about 38% of U.S. adults have now received at least one dose of Covid-19 shots, per the Bloomberg Vaccine Tracker, the global rollout of vaccines has been much slower, with under 8% of the global population vaccinated.

Moreover, there’s a possibility the Covid-19 vaccinations will be an ongoing process, requiring periodic booster shots, likely with new formulations, to protect against new variants of the virus and potentially diminishing immunity. Both Pfizer and Moderna are working on developing booster doses of their respective vaccines and this […]

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