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Are These Top 2 Vaccine Makers Poised for Growth in 2022?
Stock Analysis & Ideas

Are These Top 2 Vaccine Makers Poised for Growth in 2022?

The coronavirus vaccine sales significantly boosted the financials and stock prices of top vaccine makers. However, as coronavirus cases are on a decline globally, it raises concerns over the future of vaccine makers. 

The worry around demand and sales was exacerbated further after Johnson & Johnson (NYSE: JNJ) suspended its COVID-19 vaccine sales guidance. JNJ cited demand uncertainty and global supply surplus for this decision. Meanwhile, AstraZeneca (NASDAQ: AZN) offered a weak revenue outlook for Vaxzevria (its COVID-19 vaccine). 

Against this background, let’s look at what the future holds for the top two vaccine makers. 

Pfizer (NYSE: PFE)

Pfizer’s COVID-19 vaccine Comirnaty raked in $36.8 billion in sales during 2021. Pfizer’s vaccine was the first to get FDA approval and witnessed strong global uptake, resulting in robust sales. Thanks to the demand, PFE stock more than doubled from its pandemic lows. However, it has cooled off a bit amid concerns around the COVID-19 vaccine sales. 

SVB Securities analyst David Risinger remains sidelined on PFE stock and finds it difficult to gauge “the durability of COVID-related profits beyond 2022.” 

The analyst stated that Pfizer’s management is aggressively investing in innovation and R&D to fuel long-term growth. However, the “core business prospects excluding transactions are uninspiring, and it is extremely difficult to predict the company’s earnings power as COVID-related sales decline after 2022.”  

It’s worth mentioning that Pfizer’s revenue and earnings are dominated by COVID-19 products, including Comirnaty and Paxlovid (oral antiviral for COVID-19 treatment). Pfizer reiterated its full-year revenue guidance and expects to generate revenues of $98.0 to $102.0 billion in 2022. This includes a $32 billion contribution from Comirnaty and $22 billion from Paxlovid. The uncertainty over these sales beyond 2022 could negatively impact PFE stock.

Along with Risinger, most Wall Street analysts remain sidelined on PFE stock. It has received six Buy and nine Hold recommendations for a Moderate Buy consensus rating. Moreover, the average price target of $58.92 represents 9.1% upside potential.

Moderna (NASDAQ: MRNA

The success of Spikevax, Moderna’s COVID-19 vaccine, boosted its revenues and stock price. While Moderna reiterated Spikevax’s $21B advance purchase agreements for 2022, its stock has reversed a considerable portion of its gains. Notably, MRNA stock has corrected over 46% this year as demand trends for the COVID-19 vaccine will likely peak in 2022. 

Needham analyst Joseph Stringer believes “that the success of Spikevax and COVID booster programs are largely reflected in the stock.” He maintains a Hold recommendation on MRNA stock. 

Meanwhile, SVB Securities analyst Mani Foroohar is bearish on MRNA stock due to the expected decline in future COVID-related sales amid concerns over vaccine durability competition. 

MRNA stock has received four Buy, five Hold, and one Sell recommendations for a Moderate Buy consensus rating. Moreover, the average price target of $240.71 represents 77.3% upside potential.

Bottom Line

Though it is difficult to predict the re-occurrence of the pandemic, the sales of COVID-19 products might eventually decline. Further, the positives of the COVID-19 product sales are already reflected in the stock prices of Moderna and Pfizer. Looking ahead, much will be dependent on innovation and product development that would drive long-term growth. However, the uncertainty about the demand and increasing supply of COVID-19 vaccine could remain a concern in the short term. 

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