Bernstein analyst Ronny Gal predicts that coronavirus vaccines will generate $ 40 billion in sales by 2021. What is particularly astonishing about this number is that the market only existed in December.
Big markets create big opportunities for investors. But what are the best ways to seize this particular opportunity? Here are three fantastic coronavirus stocks to buy right now.
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1. Johnson & Johnson
Johnson & Johnson (NYSE: JNJ) should release results from a late stage of the COVID-19 vaccine, JNJ-78436735, soon. It is no exaggeration to say that this vaccine can be a game changer if it proves to be safe and extremely effective. Unlike all other leading coronavirus vaccines, JNJ-78436735 requires only a single dose.
What about J & J’s commitment to sell its COVID-19 vaccine at cost during the pandemic? This will definitely mean that the earnings of the health giant will not increase in the short term even if JNJ-78436735 is successful. However, the pandemic will not last forever. A single-dose vaccine could sell billions of dollars to J&J over the next few years.
More importantly, JNJ-78436735 is not the main reason to buy Johnson & Johnson shares. An even more compelling argument to invest in J&J is that it is the largest player in healthcare, one of the largest sectors with strong long-term growth prospects. The company also offers significant diversification in the healthcare sector as a leader in the fields of health, medical equipment and pharmaceutical products.
Another good reason to buy Johnson & Johnson shares is the dividend. The company is a Dividend King – an elite group of S&P 500 members who have increased their dividends for at least 50 consecutive years. For income investors looking for stability, there is simply no better coronavirus vaccine stock than J&J.
2. Pfizer
When writing the history books about the pandemic, Pfizer (NYSE: PFE) will almost certainly be mentioned. The big drug manufacturer quickly started working with German biotechnology BioNTech (NASDAQ: BNTX) early 2020. The COVID-19 vaccine from the two companies became the first to obtain the emergency use authorization in the US.
That vaccine, Comirnaty (formerly known as BNT162b2), could earn $ 14 billion and maybe more this year. Pfizer will split sales 50-50 with BioNTech. The partners are working on developing a lyophilized version that does not require ultra-cold storage, which may be ready later in 2021. This version could make Pfizer an increased profit with Comirnaty in the long run. Unlike Johnson & Johnson, Pfizer will benefit from its COVID-19 vaccine from the outset.
Even without including the positive impact of Comirnaty, Pfizer expects to deliver adjusted annual earnings growth of around 10% over the next few years, with annual revenue growth of around 6%. These are risk-adjusted forecasts, so the growth rates are not dependent on all the Pfizer pipeline candidates breaking out.
Do not overlook Pfizer’s dividend. The company is not like J&J, but its dividend yields more than 4%.
3. Novavax
Interested investors are likely to like Johnson & Johnson and Pfizer. But what about more aggressive investors? Novavax (NASDAQ: NVAX) can only be the ticket.
Like J&J, Novavax expects to report results for its late-stage COVID-19 vaccine candidate soon. However, there is one catch point: that late-stage study is being done in the UK. Novavax only started the US study in late December, so it will be a few more months before results are available.
Still, Novavax could be a big winner in the coronavirus vaccine market. Bernstein, Ronny Gal, believes that biotechnology will generate $ 3.8 billion in sales this year. If he were right, Novavax’s market capitalization would rise much higher than the current level of about $ 8 billion.
Novavax also has another promising candidate in the experimental flu vaccine NanoFlu. It has already been tested by the late stage. The company only needs to complete a test for the durability of manufacturing lots to submit US approval. With two potential blockbusters waiting in the wings, I think Novavax’s risk reward profile makes it probably the best coronavirus stock for 2021.