Using TipRanks’ Stock Comparison tool, we can compare the two vaccine stocks.
Pfizer was already producing stellar financial results prior to COVID-19; in 2019, operating income grew by 13.29%, with the company’s wide range of approved drugs contributing to growth.
In 2020, Pfizer spent a lot of capital on Research & Development for the COVID-19 vaccine, which meant that operating income didn’t improve all that much in 2020 (+20.89%), even after the vaccine rollout started.
However, in 2021, Pfizer’s income statement took off, as operating income has risen by 159.42% year-over-year.
Research & Development costs are predicted to flatline for now, while the company’s topline revenue is anticipated to grow even further, as booster shots are likely to be consolidated.
Pfizer is in a good spot from a value perspective: the stock’s PEG ratio (0.26) is trading well below the overvalued benchmark (1.00), and its PE ratio is trading below its 5-year average by 1.45%.
Furthermore, Pfizer offers an attractive dividend, with a yield of 3.64% and 11 consecutive years of growth. The cash payout ratio is at a 32.42% discount to its 5-year average, which means that there’s plenty of room left for dividend increases in the future.
Wall Street thinks Pfizer stock is a Hold, with an average Pfizer price target of $45.55, implying upside of 7.30%. There have been 2 Buy ratings on the stock, 9 Hold ratings, and no Sell ratings.
Moderna wasn’t well-known to most before its discovery of the initial COVID-19 vaccine. In the years prior to the vaccine rollout, Moderna was burning through capital and sustaining heavy operating losses; in 2019 the company had operating losses of 940%.
In 2020, the operating losses narrowed to -36%, but over the past year an operating profit of 54.39% was achieved as it rolled out its vaccines.
Moderna’s financial statements could continue to benefit from booster shots, but its reliance on the COVID vaccine alone ensures that the stock is in overvalued territory.
Moderna isn’t profitable unless it converts its financial statements to U.S. accounting standards, where it has a PE ratio of 33.37, which is twice as high as Pfizer’s. Furthermore, the company’s trading at a price to sales ratio that is 129.51% higher than the sector average; this is underappreciated considering the large spike in vaccine sales.
Lastly, unlike Pfizer, Moderna doesn’t pay a dividend. Investors are likely to seek dividends going into Q-4 and Q-1 in 2022, as the market could face a drawdown. Moderna’s not capable of paying a dividend because it won’t be able to sustain its net income without regular mass vaccine rollouts.
Wall Street thinks Moderna is a Hold, with an average Moderna price target of $363.13, implying upside of 19.09%. There have been 3 Buy ratings on the stock, 7 Hold ratings, and 2 Sell ratings.
Pfizer could still be worth buying, because of the company’s solid history and its dividend capacity. Moderna was a sporadic beneficiary of the vaccine rollout, but I anticipate the overvalued stock to draw down, even given the possibility of regular booster shots.
Disclosure: At the time of publication, Steve Gray Booyens did not have a position in any of the securities mentioned in this article.
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