Moderna, Pfizer: Are Covid Vaccine Stocks A Buy As Markets Await Efficacy Data?

Our indicative theme of Coronavirus Vaccine stocks – which includes a diverse set of U.S. based pharma and biotech stocks that are working on Covid-19 vaccines –  is up by over 670% year-to-date, on an equally weighted basis, compared to the S&P 500 which has gained just about 3% over the same period. While the broader markets have seen a sell-off over the last week, led by technology stocks, U.S. Covid vaccine players have largely held steady as they continue to quickly progress with trials, with clinical data on late-stage trials likely to trickle in from as early as October. Separately, the Oxford-Astrazeneca vaccine (not part of our theme) has also faced setbacks, as an illness was reported in two participants in the U.K. While this might be unfortunate, investors could see this as positive for other vaccine players considering that the Oxford vaccine is seen as a front runner in the race. Below is a bit more on the companies in our theme of Coronavirus Vaccine stocks and relative performance.

Novavax (NVAX), a late-stage biotechnology company engaged in vaccine development has seen its stock surge by over 2,400% year to date, driven by its Covid-19 vaccine development work. The stock has returned 176% since the end of 2018. The company’s vaccine candidate is currently in phase 2 trials.

NVAX

Moderna (MRNA), a clinical-stage biotech that is carrying out phase 3 trials of a Covid-19 vaccine, has seen its stock rally 240% this year but remains down by about -30% from its July highs. The company is likely to seek emergency authorization for high-risk groups if its candidate proves at least 70% effective. (Related: How much could a Covid-19 vaccine add to Moderna’s EPS?)

Johnson & Johnson (JNJ) announced on Wednesday that it was entering the final Phase 3 stage of its Covid-19 vaccine clinical trial, seeking to enroll up to 60k participants in the U.S. and abroad. The stock is almost flat year-to-date and is up by about 17% since 2018. (Related: Is Johnson & Johnson a better bet than Merck?)

Pfizer (PFE): the pharma major, which is working with German partner BioNTech on a Covid-19 vaccine, is down by -6% year-to-date. The stock is also down by about -13% since 2018. Phase 3 testing for the vaccine began in the U.S. in July and the company expects to have early results on the efficacy around October. (related: Pfizer looks less expensive compared to Roche)

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio to beat the market, with over 100% return since 2016, versus about 50% for the S&P 500. Comprised of companies with strong revenue growth, healthy profits, lots of cash, and low risk, it has outperformed the broader market year after year, consistently.

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