For what feels like months now, we’ve been closely following the race to develop a COVID-19 vaccine. From among the top pharmaceutical stocks looking to bring an end to the pandemic, one has made a big announcement that puts it ahead of the pack: Pfizer Inc. (NYSE:PFE). Pfizer stock saw modest gains as the company announced it was “likely” to release a coronavirus vaccine to the public before 2021.
Even better, this is setting up PFE stock for massive gains if it’s able to follow through.
Remember that there are a number of competitors in the pharma stock space looking to be the company that produces the first viable vaccine to counter COVID-19. Companies like Moderna Inc (NASDAQ:MRNA) and Gilead Sciences, Inc. (NASDAQ:GILD) have long been rumored to be among the companies closest to developing a vaccine, but Pfizer Inc has soared ahead with its most recent announcement.
In a Face the Nation interview, Albert Bourla, Pfizer Inc.’s CEO, said that it’s “likely” the U.S. will get a coronavirus vaccine treatment to the public before the end of the year. He went on to say that company was already preparing for a positive outcome. (Source: “Pfizer CEO Albert Bourla on Face the Nation,” CBS News, September 13, 2020.)
With the speed of the vaccine’s development, there is concern over what the U.S. Food and Drug Administration (FDA) will do regarding approval, but considering that there is an election coming up and that millions of Americans (and people around the globe) are eager for things to go back to something resembling normal, this could weight heavily in the favor of fast-tracking the medicine.
“I cannot say what the FDA will do,” Bourla said. “But I think it’s a likely scenario, and we are preparing for it.”
The scenario, he elaborated, would involve distributing “hundreds of thousands of doses.”
The FDA received a proposal from Pfizer Inc. on the 12th that would expand its late-stage trial to 44,000 participants, up from the 30,000 target. (Source: “Pfizer stock rockets as potential COVID-19 vaccine delivery by end of 2020,” Yahoo! Finance UK, September 14, 2020.)
While there’s no certainty that PFE stock is going to be the ultimate winner of the vaccine sweepstakes, things are certainly looking up for it.
Consider that Pfizer stock is just now hitting its stride, while other competitors, like MRNA stock, may have seen their best gains already.
Chart courtesy of StockCharts.com
Moderna stock, as seen in blue above, has experienced a steep decline from a few months ago. I’ve been talking about MRNA stock since March; investors who got in on it at the right time may have seen huge gains to their portfolio after the company leapt to lead position in the coronavirus vaccine race.
But with many competitors now edging MRNA out, all those early gains are going to render the company fairly volatile, something else I predicted.
Pfizer stock, meanwhile, is a much more stable buy. First of all, it’s not solely dependent on the coronavirus vaccine outcome for its future stock performance; this is a huge pharma stock that has a number of other drugs on offer, not just this one-shot deal.
And, again, as seen in the chart above, PFE stock (black) is just now getting going.
While PFE stock received relatively little attention early on in the vaccine race, it is now hitting its stride at just the right moment. That means that the heights that Pfizer vaccine can attain are potentially greater than those of its competitors simply because it didn’t have all those big lead-up gains. Instead, it’s saving it all for the real thing.
This means that the company isn’t as overvalued as the others, leaving room for even higher gains should it be the developer of the first COVID-19 vaccine.
The final bit of good news is that some of the media signals that the company has sent in the past have implied that it felt confident about its progress with a COVID-19 vaccine.
“I think it’s very wrong,” Bourla told Barron’s in July when asked about whether pharmaceutical companies should earn a profit from the coronavirus vaccine.
“You need to be very fanatic and radical to say something like that right now… Who is finding the solution? The private sector found the solution for diagnostics, and the private sector found the solution for therapeutics and is along [the] way to find more solutions for therapeutics and vaccines. So how can you say something like that? Doesn’t make sense.” (Source: “Pfizer CEO Says Companies Should Make Profit On Covid-19 Vaccines,” Barron’s, July 28, 2020.)
Now, whatever your moral views are regarding this issue, it’s clear that Bourla is keen to eke out a significant profit should Pfizer Inc. be the first to develop the vaccine.
The company is looking to charge the U.S. government $19.50 a dose for the first 100 million doses, a price that Bourla said would be roughly the same rate the company charged any developed country that committed to buying a similar volume of dose. (Source: Ibid.)
In other words, we could see huge influxes of capital flood into Pfizer stock. Even better, this is an American pharma stock, meaning that the U.S. will be more willing to do business with the company.
And that’s just the U.S. market. If PFE stock is able to get out far enough ahead of its competitors, it could dominate globally, potentially earning billions in profit over the next few years as the vaccines (which are rumored to require two doses for full effectiveness) could become one of the hottest items around in 2021.
We’re all hopeful that a vaccine for COVID-19 will be developed by anyone. Not only would it mean saving lives, but it would also be a path towards normalcy that, right now, remains illusive in our pandemic-stricken world.
Having said that, being able to correctly predict the winner of the vaccine race can no doubt pay off big in terms of investment returns, as the COVID-19 vaccine would literally overnight become the must-have good of the next year, with billions of people clamoring for it.
While we still may be a few months away, it’s clear that we are getting closer and closer to a release date and, in turn, we’re closer to seeing massive returns come in for the investors who pick the right stock. Right now, it appears that PFE stock is in the lead.