While the U.S. government rushes to distribute COVID-19 vaccines for its citizens, many investors are looking toward both upcoming and long-term pharmaceutical companies developing them as their next big position.
Vaccines by Moderna and from a collaboration between Pfizer and BioNTech were authorized in January by the Food and Drug Administration to be safely administered to the public. Both vaccines work using messenger RNA (mRNA), which essentially trains cells how to produce proteins in the recipients’ bodies enforcing an immune response.
The world is eagerly awaiting a COVID-19 vaccine, but pharmaceutical companies are embattled by political pressure on both sides of the aisle as well as dips in drug sales. Here's what's happening in the pharmaceutical industry and what's next for the industry.
Though the two vaccines are similar in nature and identical in purpose, they’re vastly different in production. Below is a quick overview of the vaccines to help narrow down if Moderna or Pfizer is a better investment right now.
New vaccines are promising but not without flaws
Pfizer and BioNTech’s vaccine was approved by the FDA in mid-December and in record time — under 12 months after the pandemic had initially started. The vaccine has an efficacy rate of 95% but isn’t perfect, though it’s certainly better than nothing.
This vaccine requires that health care officials administer two separate doses to the patient three weeks apart from one another for the full effects and must also be kept under minus 70 degrees Celsius for 30 days to preserve its potential effectiveness. Upon being exposed outside of their storage freezers, hospitals then have up to five days to use the doses before they expire.
The FDA had decided it was safe to start administering the Moderna vaccine to the public as well just a week later on Dec. 18, increasing the chances of helping the U.S. tackle the pandemic.
Much like Pfizer-BioNTech's vaccine, Moderna’s vaccine must be administered in two separate doses as well, except the wait time increases to four weeks instead of three. Moderna’s vaccine also requires that it must be stored at minus 20 degrees Celsius to preserve it effectively and can be stored for up to six months within a freezer.
JMU was selected by the Virginia Department of Health to administer coronavirus vaccines.
When it comes to the distribution of the vaccines, Pfizer-BioNTech has the advantage over Moderna, as the company can ship 5,000 doses at one time. By comparison, Moderna can ship up to 1,200 in a single shipment. Although Pfizer and BioNTech are capable of packing and distributing more doses at once, the company is limited to how many they can distribute by planes because the vaccines must be kept in dry ice, while Moderna’s vaccines don't require this.
Does opportunity remain in Moderna, Pfizer shares?
Potential pharmaceutical investors must question whether the easy money has already been made in Moderna and Pfizer or whether more upside remains.
Thomas Reuters’ currently has a compiled recommendation chart from analysts, which currently has Pfizer (PFE) as a strong hold and Moderna (MRNA) as a lower-tier buy, which are nearly similar ratings. Pfizer is currently averaging around $36.50 a share, and Moderna is floating around $125 a share.
However, since both vaccines have been approved by the FDA, Pfizer and Moderna’s stock prices have dropped both 10.7% and 7.6% since Dec. 11 and Dec. 18, respectively, to the present day. Turbulence is expected with some investors for multiple reasons surrounding Moderna’s short track record and the massive run-up the stock has had, given that it rose 434% last year.
For investors who can see the profitability behind the vaccines, however, now is a great time to start a position with either company. Because both these companies have high-efficacy vaccines, Moderna and Pfizer-BioNTech were paid $15 and $19.50 a dose for 100 million doses, respectively. However, Moderna received government money while Pfizer didn’t.
When looking at the long-term growth of both companies since the start of the pandemic, Pfizer has stayed stagnant with its growth, mostly because of its long-term establishment as a corporation, at an average of $33 dollars a share. Meanwhile, Moderna was sitting at a humble average of $21 dollars a share and has now increased to a stunning $125.
Both Pfizer and BioNTech are two promising yet somewhat risky investments to make. When looking at both investments, they’re still the only two vaccines to be currently approved for emergency use by the FDA, leaving companies like AstraZeneca and Johnson & Johnson still developing their vaccines.
Although there are 21 companies still developing vaccines, many of them are trying to make it easier on hospitals by supplying single-dose shots and shots that are normal vaccinations as compared to the new mRNA technology in the currently approved vaccines.
For those who believe that mRNA technology will be effective, then Pfizer and Moderna vaccines could bring some of the highest returns if their technology holds true.
Before investing, one should also note the differences between the two companies. Pfizer has been a long-term player in the U.S. pharmaceutical game and has a mature dividend yield of 4.16%, while Moderna is quite the opposite as a fast-growing company that’s reinvesting profits in order to promote growth.
However, those with a low tolerance to risk and would like to play a more defensive strategy, then it’s recommended that one should hold off these stocks and consider investing in a more traditional pharmaceutical company that’s developing an easier, more common way of vaccinating citizens.
Will PerDieu is a sophomore finance major. Contact Will at email@example.com.
Disclaimer: I’m a long-term investor in Pfizer. I wrote this article myself, and it expresses my own opinions. I’m not receiving compensation for it, and I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: Investors are always reminded that before making any investment, they should do their own research on any name directly or indirectly mentioned in this article. Investors should also consider seeking advice from a broker or financial adviser before making any investment decisions. Any material in this article should be considered general information and shouldn’t be relied on as a formal investment recommendation.