COVID vaccine stocks rise as China imposes new lockdowns

Posted: 14 March 2022 7:41 pm
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China ordered 51 million people into lockdown as COVID-19 cases continue to rise, lifting vaccine sector stocks including Moderna and BioNTech on Monday.

Shares of several COVID-19 vaccine makers surged Monday, possibly on the spike in coronavirus cases in China that prompted the government to order a lockdown of 51 million people.
BioNTech (BNTX) stock closed Monday up 12%, while shares of Moderna (MRNA) and Pfizer (PFE) closed up 9% and 4%, respectively. Novavax (NVAX) stock closed down 1.5% for the day.
Investors have been moving away from COVID vaccine stocks over the past six months as coronavirus cases wane. But a resurgence could drive a need for more vaccine production, and draw investors back.

Where the shares stand

Shares of BioNTech are down 67% from their 2021 high of $464, while Moderna stock has fallen 70% from its high of $497.49. Meanwhile, shares of Pfizer have dropped 15% from their 2021 high of $61.71. Novavax stock has seen the biggest retreat, falling 78% from its 2021 high of $331.68.
Globally, new coronavirus cases declined in February, but cases have been ticking higher over the past two weeks.
Wall Street thinks these stocks are undervalued at their current prices and investors may be wondering if rising cases will renew interest in COVID vaccine stocks.

What happened?

Chinese authorities reported 1,437 new cases across the country on Sunday, a nearly sevenfold jump in only a week.
China, with its stringent zero-COVID policy, is now sending tens of millions of people across the country into lockdown, according to ABC News. This includes 24 million people in the northeastern province of Jilin and 17.5 million and 10 million people in the southern cities of Shenzhen and Dongguan, respectively.
Separately, COVID cases have been on the rise again across countries in Europe. Countries like the United Kingdom, Germany and Switzerland are seeing yet another rise in cases, according to data from Johns Hopkins University.
In the US, new COVID cases are trending downward and have been since mid-January.
Still, rising cases abroad and news of a new lockdown in China lifted COVID vaccine sector outlook on Monday.
Moderna and BioNTech were among the top market gainers Monday morning, soaring as much as 21% and 18%, respectively. Novavax climbed as high as 14% but gave up these gains over the course of the trading day and finished in the red. Pfizer stock climbed 5%.
Note that Moderna also began a trial of an AIDS vaccine, which may also have helped the stock.

Now what?

Shares of BioNTech, Moderna and Novavax are well off their highs, but Wall Street seems to think they’re oversold and have room left to run.
BioNTech is expected to post 2021 revenue of $39.96 billion when it reports on March 30, with 2022 revenue coming in slightly lower at around $36.44 billion. The average price target for the stock is $296.19, which is 95% higher than its current price.
Moderna posted 2021 revenue of $18.5 billion and has advanced purchase agreements (APAs) worth up to $22 billion for 2022. They see the stock climbing 59% to $238.66 over the next 12 months.
Novavax posted $1.1 billion in revenue for 2021 and expects to generate 2022 revenue of between $4 billion and $5 billion.
But investors need to also look at these companies’ pipelines to determine a long-term valuation beyond COVID sales, which should eventually wane.
While shares of Pfizer didn’t explode like these biotech stocks, it’s an established pharmaceutical company with an extensive pipeline. Pfizer posted $81.3 billion in revenue in 2021 and expects to generate 2022 revenue of between $98 billion and $102 billion.
Renewed interest in COVID stocks could bring the volatility back to the three high flyers that gave investors those big gains during the onset of the pandemic, but Pfizer may be best positioned for steady growth.
At the time of publication, Matt Miczulski owned shares of BNTX, MRNA and NVAX.

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