Vaccine stocks during a pandemic
It is often said that every crisis brings a great opportunity.
Such catastrophes lead to distortions and uncertainties in the financial markets, but can also lead to new opportunities for investors, as asset classes react to different environments.
Since the World Health Organization (WHO) declared COVID-19 a pandemic on March 11, 2020, the performance of vaccine stocks has been mixed – but with some notable winners hitting three- or four-digit returns.
This is how much a $ 1,000 investment would be worth as of March 31, 2021 if you had invested money in every vaccine stock at the start of the pandemic:
| share | Investment value | % Growth | Market Capitalization ($ B) |
|---|---|---|---|
| Novavax | $ 16,491 | 1,549.1% | $ 14.3 |
| Moderna | $ 5,019 | 401.9% | $ 59.9 |
| BioNTech | $ 3,247 | 224.7% | $ 31.3 |
| Johnson & Johnson | $ 1,252 | 25.2% | $ 419.8 |
| Pfizer | $ 1,122 | 12.2% | $ 207.2 |
| AstraZeneca | $ 1,121 | 12.1% | $ 93.8 |
| Sanofi | $ 1,096 | 9.6% | $ 105.2 |
The vaccine business
The returns on vaccine stocks fluctuate widely. They’re stunning in the case of Novavax and Moderna, but they also seem pretty disappointing when you think of Sanofi, AstraZeneca, and Pfizer.
One factor behind the mismatch in stock price performance is the potential revenue from vaccine sales versus the rest of the existing business, as vaccine sales will have a much greater impact on smaller company fundamentals.
For example, prior to the pandemic, Novavax had sales of just $ 18.7 million – which meant capturing some of the global vaccine sales would create tremendous value for shareholders. On the flip side, vaccine sales will affect the fundamentals of Sanofi’s business much less as the company already has $ 40.5 billion in sales.
To put it in perspective, analysts expect total COVID-19 vaccine sales of around $ 100 billion, with $ 40 billion in profit after tax.
Vaccine stocks versus the S&P 500
Even in a booming and valuable industry, it is difficult to identify the long-term leaders. In the cell phone market, for example, there was a time when the likes of Motorola, Nokia, and Blackberry seemed sacrosanct but eventually got lost.
Similarly, with the limited information available at the start of the pandemic, few, if any, could have separated the winners and losers of this group with accuracy.
Over the past year, the S&P 500 has grown 44.9%– which means that only three of the seven vaccine stocks have seen their share prices above the market.
Nobody said that helping solve a global pandemic guarantees a payout.
