Pfizer an Moderna: A Race for a Vaccine
If there is one piece of news that will grab all the limelight for the entire year, it’s definitely going to the potential COVID-19 vaccine. Not limited to talk among the public, this also became a great point of debate during the US elections. As the race for the COVID-19 vaccine intensifies and we are on the last lap, the two front runners are gearing up. Moderna (MRNA) and Pfizer (PFE) are much ahead of other companies in this sprint and have already completed their phase 3 trials. As the Food and Drug Administration (FDA) inches closer to giving a green light to either vaccine, this will be an exciting next few weeks for both of these companies.
Moderna’s COVID-19 vaccine is 94.5% effective as per the phase 3 trial data. 42% of trial participants are from high-risk groups, which suggests its vaccines are going to be pretty effective and is going to be widely accepted. It has to be kept at a temp of 2-8 °C. Moderna hopes to ship 20 million doses by 2020’s end. At the same time, Pfizer’s vaccine has an efficacy of close to 95%. It also has to be kept at a temp of 2-8 °C. It’s Phase 3 trial conducted on 41,000 volunteers with different ethnicity and age groups, suggested a pretty good response to its vaccine. Pfizer has just requested that the FDA approve the emergency use of its vaccines potentially starting next month. Efficacy of both the vaccines looks pretty much the same based on the trial 3 results.
The FDA potentially can approve one or both vaccines by mid-December. The prospects of the efficacy of the vaccines are pretty bright. And at the same time, stock movement over the next few months is going to be exciting.
Let’s have a look at how these two companies are stacked against each other in the Market.
Pfizer Inc (NYSE: PFE)
Established in the year 1849, this 171-year-old company is one of the leading pharmaceutical corporations in the world. Headquartered in New York City, Pfizer develops and produces medicines and vaccines for a wide range of medical disciplines. Pfizer stock has gone through ups and downs this year, many times based on news related to COVID-19 vaccines. The stock has been almost at the same level compared to last year.
Pros: Pfizer has a history of consistently paying dividends over years with a dividend yield continuously close to 4%. Also, since the stock has not gone up significantly in the last year, any positive news on the back of vaccine commercialization may have significant upside.
Cons: Being a behemoth, Pfizer stock moves slowly even on the back of positive news. Also, if last year’s stock price is anything to go by, the stock price might not witness significant movement.
Moderna Inc. (NASDAQ: MRNA)
Established in the year 2010, Moderna is a relatively new company which got listed just 2 years back. In December 2018, Moderna conducted the largest biotech IPO in history. It raised $600 Million USD, implying a valuation of $7.5 B. As of Nov 2020, Moderna almost moved 5 times in valuation to $35 B in the last 2 years. In this last year alone, the stock has moved 5 times primarily riding on COVID-19 vaccine news.
Pros: Moderna being a biotechnology company, has a lot of interest from many new age investors. Also, since it was able to develop the COVID-19 vaccine in a very short span of time, despite being such a small company, Moderna gained a lot of investor confidence in its management and capability.
Cons: The stock has moved almost 5 times this year and hence it might not have enough upside as most of the positive news has already been priced into the stock price. However, any negative news may have a significant detrimental effect on the stock price.
Here is a face to face comparison of both the stocks:
The face to face comparison of these stocks is nothing short of comparing a behemoth with a new entrant. Being a relative newcomer, Moderna has been able to move significantly up primarily based on the COVID-19 vaccine news. The market cap of Pfizer is almost 5 times that of Moderna, but when it comes to revenue it’s almost 600 times. Moderna does not have any profitability, rather it has seen a significant loss in the last 2 years. Pfizer has a consistent history of paying dividends which is going to soothe many conventional investors. Pfizer has decent EPS over the years and the P/E of close to 23 gives the possibility of this stock going up from here. Also, the COVID-19 vaccine can add to the profitability and in turn, help Pfizer improve its EPS.
So, if you are a conservative investor and want to protect your money and earn decent returns then Pfizer is the stock you should go for. But if you are an aggressive investor and have a lot of risk appetite, then you can go for Moderna as the stock still has potential upside from here. But the stock has significant downside as well, where the stock price can go down significantly. Take your own investment decision based on your risk appetite.