Jump into the last car
Have time to invest in a vaccine
Sergey Ruban, Finversia
Recently, a lot of attention has been paid to the American stock market, especially the S&P 500 and Nasdaq indices, whose quotes are growing by leaps and bounds. Everyone is talking about US-China relations and the new Fed policy. Meanwhile, the coronavirus epidemic continues in the world, moreover, the second wave of the pandemic is approaching us.
This threat extends not only to people who may get sick, but also to financial markets. And they may suffer losses again if governments decide to re-impose restrictions.
In other words, the main cause of all problems in the world, both for health and for business, is coronavirus today.
Almost immediately after the outbreak of the pandemic, dozens of companies began to create a vaccine against this disease. According to WHO, there are more than 150 projects in the world to create a cure for coronavirus. The vaccine is being sought by both private companies and government organizations, and many universities around the world.
Despite the large number of applicants in this marathon, only two dozen companies have reached the stage of clinical trials, but only two teams have reached the third stage of testing. These are Sinovac Biotech from China and AstraZeneca, which works together with Oxford University.
Not so long ago, the White House decided to speed up the development process by selecting 5 final candidates for a coronavirus vaccine. Development firms should receive additional money from the state government. These are Moderna, Pfizer, Johnson & Johnson, AstraZeneca and Merck & Co. AstraZeneca and Johnson & Johnson have already received $2 billion in government funding from the White House.
Such interest in these studies on the part of the government is not accidental, because not only the health of the nation, but also entire sectors of the world economy depend on the vaccine.
In such conditions, the pharmacological business (or rather, the search for a vaccine) becomes very profitable. Because in addition to benefits and free funding, if successful, these companies will receive substantial amounts from drug manufacturers and from the state, not to mention charitable foundations. On the other hand, the country that receives the vaccine first will be able to protect its population faster than other countries in the world and begin economic recovery. That is, whatever one may say, but the vaccine is now a strategic object that will make its owner rich.
If you haven't had time to invest in one of the aforementioned companies yet, it's not too late to make an investment now. Let's look at the main candidates, and see how they are doing, and what their financial situation is at the moment.
Let's start with the American biotechnology company Moderna, which develops drugs and vaccines based on RNA technology.
Before the outbreak of the pandemic, the loss per share of this issuer was equal to $1.39. This biotech company does not yet have successful developments that would bring profit. However, in the future, she can occupy her niche in this business, as she has several drugs for the Zika virus, melanoma and dense tissue cancer.
In August, the US president signed a deal with the issuer to receive 100 million doses of the leading vaccine. According to the company itself, this deal gives the American government the right to purchase 400 million additional doses in the future. The transaction amount is $1.53 billion.
Let's just say that the White House has already invested $955 million in the development of this company's medicine. Thus, the total investment in Moderna exceeded $2.4 billion. The candidate vaccine of this issuer is at the last stage of testing on humans, and, according to the forecasts of the company itself, it is necessary to wait for the results in the middle of autumn.
Technically, the shares of this issuer are now in a drawdown after they reached the $83 level at the end of July. After testing this mark, a rapid decline in the area of $ 63 followed. A rebound began to form here. In our opinion, now there is a good opportunity to buy the securities of this company. While there is no confident leader with the vaccine, the price of Moderna securities will move up and down. This can be used for speculative trading. The nearest purchase target is the $80 level.
Next, we will talk about the international pharmaceutical company Pfizer. The capitalization of this medical corporation exceeds 190 billion US dollars. She is developing a vaccine together with BioNTech. This pharmaceutical company is in the second stage of clinical testing and should soon move to the third phase.
The company has a rich experience and history of its business. Her business is profitable with a steady increase in revenue and dividends. However, when the overall market situation deteriorated due to the pandemic, the company's financial statements also suffered.
Thus, EBITDA decreased by 3% when compared with 2019. Earnings per share decreased from $2.87 to $2.80.
According to analysts, the negative trend may continue until the first half of 2021. Now the company's quotes show an upward trend. All thanks to participation in the development of a coronavirus vaccine. The American government decided to purchase the vaccine of this company. So far, we are talking about ten million doses worth $ 1.90 billion.
In the second half of July, Pfizer's shares reached the level of $39.30. Here the bulls' fuse dried up, and the asset moved into a phase of lateral consolidation. Trading in recent weeks has been in the range of $ 38-39. Most likely, market participants believe in the success of this pharmaceutical company, as they do not sell them, preferring to wait for news – and it does not matter at all whether it is good or bad. We think that the securities of this company can be bought in any case. Even if Pfizer does not create a vaccine, it has enough other projects that will help it continue to grow.
Johnson & Johnson
The third in the list is the American pharmaceutical company Johnson & Johnson. In addition to medicines, it produces cosmetic and sanitary products, as well as medical equipment. J&J's business has been going uphill all the time throughout history.
During the last reporting period, net profit grew by 0.7% in annual terms and reached $9.42 billion. The company's revenue decreased by 11% to $18.33 billion. Experts expected revenue at the level of $ 17.5 billion. However, this insignificant decrease is caused by the pandemic. Upon its completion, the issuer's securities will quickly catch up.
Johnson & Johnson announced Janssen's $1 billion deal with its pharmaceutical subsidiary in early August to acquire 100 million doses of the vaccine. While the company is conducting the first human trials, it is expected that more or less serious results will be known in September-October.
Johnson & Johnson is not just doing well, they are doing wonderfully. In recent months, the securities of this issuer have shown stable growth. There were several waves of decline, but they did not last long. The last pullback ended in early August around $144, after which the asset staged a rally and is now storming the $155 level.
The growth of this asset is associated not only with the search for a vaccine, but also with the company's core business, which is thriving during the pandemic. We are betting on the continued strengthening of the market and its movement towards the resistance of $ 160.
In conclusion, AstraZeneca. She is currently the favorite in this race. The company has experience in creating medicines, for example, for influenza, Zika virus, MERS and so on. To increase the chances, AstraZeneca has teamed up with several institutions and companies.
Not so long ago, the United States joined the testing. Thanks to the support of the USA, the research goes faster. AstraZeneca has already agreed with manufacturing companies to release more than 1.5 billion doses of the drug.
AstraZeneca has been in business for a long time, and is profitable. Over the past year, its earnings per share amounted to $0.58. Revenue increased by 2.7% year-on-year. After the rapid growth in July on the news and reaching the level of $64, the company's securities fell back to the area of $ 55. Moreover, the market continues to look down. Most likely, market participants are driving the price towards $ 54, where they will prepare a springboard for an upward leap.
Before you decide to invest, you should understand that only one company will win, which will be the first to create a vaccine, and it will get all the laurels. There can be no second or third place. As soon as one or two teams declare victory, the shares of other competitors may collapse. Take into account the situation of companies before they started developing from COVID-19. Many companies had no prospects and developed slowly.
In any case, the coronavirus vaccine will cause a surge of interest in the company, but if it has nothing to offer the market after that, then the shares will take off as quickly as they will fall.
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