The United States is rapidly approaching nine months of having the Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) Covid-19 vaccines approved under an emergency use authorization (EUA). While both companies continue to generate significant revenue from the vaccines, MRNA stock has significantly outperformed PFE stock over the past 12 months as well as in 2021.
Both companies are expected to post strong numbers this earnings season. Pfizer reports on July 28 and Moderna will report on August 5. But are investors too late? That’s what I’ll be looking at in this article.
Unless you’ve been deliberately tuning out the news, you’re aware of the Delta variant of the novel coronavirus. Each variant of the virus is being assigned a letter of the Greek alphabet, so the Delta variant is the fourth variant to be identified.
It appears that the Delta variant is hitting the unvaccinated population harder. And that is putting the Covid-19 vaccines back on the front burner for investors. In particular, the conversation is about Pfizer and Moderna, the developers of the mRNA vaccines.
These vaccines are the first of their kind. Without delving too far into the science, a key distinction of the mRNA vaccines is that recipients to not receive any part of a live virus. That distinction, among others, is either a positive or negative for individuals contemplating whether to get the vaccine.
Will the Revenue Keep Coming In?
However, the question that investors need to ask is will the variant be additive to company revenue. According to Forbes, the answer is a resounding Yes as it relates to Pfizer. The company is expected to have annual sales in 2021 of $35 billion. And of the company’s $14.6 billion in sales in the first quarter, $3.5 billion came from sales of the Covid-19 vaccine. That number is expected to be significantly higher when the company reports second-quarter earnings.
A similar story is playing out with Moderna. The company is projected to deliver $4.27 billion in revenue when it reports earnings. Since the company’s only product that is available for commercial use is its Covid-19 vaccine, its reasonable that all that revenue is vaccine related.
Is the Delta Variant a Catalyst?
This is harder to say with certainty. The variant is putting the vaccine rollout under the microscope, but it hasn’t changed the supply-demand dynamic. In June 2021, Pfizer received an EUA that allows its vaccine to be given to anyone above the age of 12. Moderna is applying for an EUA to administer is a vaccine to children 12-18. The companies are making supply agreements with foreign countries to make the vaccines available under EUAs.
And, while no consensus has been reached, it appears increasingly likely that booster shots may be required at some unspecified date. This should keep revenue flowing for both companies.
Still, none of these are directly related to the Delta variant. So don’t buy on the emotion that is being stirred up.
What Type of Investor Are You?
Normally I like to fall on one name of the other. In this case, I believe both stocks are good buys but it depends on what’s important to you. Moderna is looking to make its mRNA technology available over a wide spectrum of vaccines. The success of the company’s Covid-19 vaccine should make it easier to get their existing candidates through clinical trials.
But that will still take some time, and there is no guarantee of success. However, the company should be well funded as it goes through the process.
On the other hand, Pfizer has a prolific menu of products that are in market. But that’s also a reason why PFE stock has only delivered 20% growth in the last five years. It’s a mature player in the field. It even pays a modest dividend.
My advice is simple. Buy Moderna for its ceiling and Pfizer for its floor.
Before you consider Pfizer, you'll want to hear this.
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