COVID vaccine stocks are rising – and more highs could be ahead

Posted: 2 December 2021 4:30 pm
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Worry about the new coronavirus variant Omicron is lifting some vaccine stocks. Here’s why.

The stocks of several COVID vaccine makers jumped late last week even as the market discovered word of a new coronavirus variant and fears it could slow global recovery.

The recently-identified SARS-CoV-2 variant named Omicron was designated by the World Health Organization (WHO) as a variant of concern (VOC) last week, only days after it was first identified in South Africa.

Results for the market and those stocks have been mixed since, and the impact of Omicron is far from clear. But whatever the market does next, vaccine stocks could defy the trend and move to new highs, as they did while the COVID vaccine was in development. Here’s a look at the key stocks and their work on COVID.

Moving up as the market tumbled

As fears of the Omicron variant rattled the broader market last Friday, several COVID vaccine stocks surged.

Moderna (MRNA) soared more than 24% on Black Friday’s shortened trading day. It continued its upward momentum Monday, but has since given back some ground. At about $295, it’s still below its 52-week high near $500.

BioNTech (BNTX), the European company behind Pfizer’s (PFE) COVID-19 vaccine, rose more than 16% Friday. The stock slipped back since, and stands below the high of last fall.

Pfizer itself gained 8% over the course of the day, setting a new 52-week high above $55. The stock has given back a couple of dollars per share since.

Shares of Novavax (NVAX) — a Maryland-based biotechnology company that’s on track to file with the US Food and Drug Administration (FDA) this month for its COVID vaccine approval — were up nearly 11% Friday. But the stock has since given up these gains and has been trading lower.

The shares of vaccine makers Johnson & Johnson (JNJ) and AstraZeneca (AZN) saw only modest growth Friday. Both are trading at around the same price as before news of the Omicron variant hit.

What the companies say about vaccines and Omicron

Little is known about the Omicron variant so far, but preliminary data out of South Africa shows a large number of mutations, faster infection rates and an increased risk of reinfection with this variant. Whether Omicron is more transmissible and causes more severe disease than previous variants isn’t yet clear. The WHO is also working to confirm the effectiveness of currently-available vaccines on Omicron.

Moderna announced last Friday that it’s testing three existing COVID vaccine booster candidates against the Omicron variant. On Monday, Moderna CEO Stephane Bancel said that it could take months to develop and ship a vaccine that specifically addresses the Omicron variant.

But that timeline is far from clear. Novavax also announced last Friday that it had begun working on a version of its COVID vaccine to target the Omicron variant. The company said it would have the shot ready for testing and manufacturing in the next few weeks.

Vaccine developers BioNTech, Johnson & Johnson and AstraZeneca have also said they are testing the effectiveness of their existing vaccines against the Omicron variant and working on the development of an adapted version specific to Omicron.

How these key stocks behaved over the first wave of COVID and the last few days

Many of these COVID vaccine stocks saw tremendous growth over the last two years as COVID vaccines were developed. And most have fallen from their highs of last fall.

Investors buying last Friday were likely anticipating the same surge from Omicron. It’s too early to say if that was the right move, with so many unknown factors. There’s also no guarantee any stock will regain past highs.

That said, if you want to play that trend, here’s how each of the major COVID vaccine stocks have fared since the onset of the pandemic and how they’ve performed over the last few days.

Novavax

Novavax stock was trading at around $10 per share when it first announced its development of its novel COVID vaccine in early 2020. Over the next year, the stock would rise to $331.68 per share, an increase of more than 3,200%. It’s since pulled back and has been trading in the $117 to $265 range since March 2021.

In November 2021, Indonesia and the Philippines gave Novavax its first authorizations for their COVID vaccine. Novavax also applied for emergency use with the WHO, Australia, Canada, India, New Zealand and the UK. It completed a rolling submission with the European Union and submitted its first Biologics Licence Application (BLA) with South Korea for full approval of its COVID vaccine.

It plans to file with the FDA this month for emergency use authorization (EUA).

Though the company has lagged behind the competition, these short-term catalysts could drive the stock significantly higher. Looking ahead, Novavax expects to reach a manufacturing capacity of at least 2 billion doses in 2022. Analysts have an average 12-month price target for Novavax stock of $260.60 per share, which represents a nearly 35% premium over the previous close price of $192.65 on December 1, 2021.

Moderna

Moderna stock saw similarly explosive growth with the first wave of COVID-19. The stock was trading at around $22 per share when the company announced its plans to develop a messenger RNA (mRNA) vaccine to combat the novel coronavirus. Its stock reached a high of $497.49 per share in early August 2021 on positive second quarter 2021 financial results before pulling back to around $210 per share early last month.

Most recently, the company announced in conjunction with its third quarter 2021 financial results that it expects to generate sales of around $20 billion in 2022. The company has signed advanced purchase agreements (APAs) of $17 billion and options are in place for the purchase of an additional $3 billion in vaccines.

Over the next 12 months, the average price target according to analysts is $298.73 per share. This is a decrease of almost 4% from Moderna’s share price of $310.61 at market close on December 1, 2021.

BioNTech

BioNTech set out to develop a potential vaccine against COVID-19 in early January 2020. Its stock price stood at around $40 per share at the time.

Over the next 11 months, the company would partner with Pfizer to develop and commercialize its mRNA-based vaccine candidate, complete its clinical trials and win FDA emergency use authorization. By December 2020, shares of BioNTech were trading at around $130 per share.

BioNTech saw it’s largest increase in share price leading up to receiving full FDA approval in late August 2021, when its stock reached an all-time high of $464 per share. It too has since pulled back, dropping to a share price of $207.51 in early November 2021.

Looking forward, analysts give BioNTech a “Hold” with an average price target of $318.25 per share. This is a decline of 4.85% from its closing price of $334.48 on December 1, 2021.

Pfizer

Shares of Pfizer have seen only modest gains since announcing its partnership with BioNTech in March 2020. Pfizer stock has gradually climbed from a 2020 low of $26.43 to its recent all-time high of $55.70 per share following news of the Omicron variant.

After a slight pullback Monday, shares of Pfizer are again trading near these recent highs. According to the company’s third quarter 2021 results, it’s expecting 2021 revenues from its COVID vaccine of around $36 billion. This comes from the 2.3 billion doses expected to be delivered by the end of 2021.

Looking ahead, the company plans to deliver at least two billion doses of its vaccine to low- and middle-income countries by the end of 2022. Over the next 12 months, analysts expect an average share price of around $50 per share, giving the stock a “Hold.” Pfizer stock closed Wednesday December 1, 2021 at $54.68 per share.

Johnson & Johnson

Johnson & Johnson shares were trading at around $150 when it first announced its response to COVID-19 back in January 2020. Over the following months, the stock would drop to its 2020 low of $109.16 before rebounding and climbing steadily to its 52-week high of $179.92 in late August. The drugmaker was given emergency use authorization in the US earlier this year and received authorization to use its vaccine as a booster shot in October 2021.

Shares of Johnson & Johnson have since pulled back from its 52-week high, closing at $158.08 on December 1, 2021. Analysts rate the stock a “Buy” with an average price target of $187.76. This represents a premium of almost 19%.

AstraZeneca

AstraZeneca stock was trading at around $54 per share when it announced it would be collaborating with Oxford University to develop and distribute a novel COVID-19 vaccine. The stock peaked at $61.10 per share a few months later before dropping to its 2021 per-share low of $48.06.

Bloomberg reported yesterday that AstraZeneca is dropping its plans to test its COVID vaccine as a booster in the US. The UK drugmaker has also yet to receive clearance for its shot in the US.

Analysts still give AstraZeneca a “Buy” rating and see an average 12-month price target of $70.45 per share. This is a 28% premium over the company’s $54.88 per share price at market close December 1, 2021.

At the time of publication, Matt Miczulski owned shares of Pfizer and Novavax.

The value of any investment can go up or down depending on news, trends and market conditions. We are not investment advisers, so do your own due diligence to understand the risks before you invest.

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