Top Coronavirus Vaccine Stocks to Watch
Did you know that investors have always had a love/hate relationship towards pharmaceutical and biotechnology vaccine stocks? After all, some of them pay huge dividends which is great for the income investor but they are also extremely volatile due to failed trials, strict regulatory requirements and medical lawsuits in some cases.
But, during the pandemic of 2020, EVERYTHING changed. Investors realised just how important coronavirus vaccine stocks are. More importantly, investors have been eager to bullet-proof their portfolios from future pandemics and virus outbreaks creating a huge surge in demand for the best vaccine stocks to buy.
▶️ Case in point: Novavax Inc, a Covid-19 vaccine stock surged up nearly 7,000% during the pandemic!
This means that now could really be the best time in history to discover the top vaccine stocks to watch. If you do not want to miss out on this historic shift in investor sentiment, then keep on reading!
In this article, you will learn:
✅ What the best coronavirus vaccine stocks to buy are and the longer-term reasoning behind the selection.
✅ Why every investor needs to bullet-proof their portfolios with the best vaccine stocks to make sure they are fully diversified and ready to capitalise on this historic shift in sentiment.
✅ Which pharmaceutical companies and biotechnology companies are best suited towards capitalising on the volatility of Covid vaccine stocks and how exchange traded funds (ETFs) can help time-poor investors.
✅ How to open an Invest.MT5 account with a minimum of just €1 and access low commissions from just $0.01 on US stocks and start collecting dividend income from some of the top pharmaceutical vaccine company stocks!
✅ How to open a Trade.MT5 account to trade coronavirus stocks via Contracts for Difference (CFDs) to try and capitalise on intra-day volatility and potentially profit from both rising and falling markets.
✅ How to open a FREE demo trading and investing account so you can test all of the services from Admiral Markets UK Ltd in a virtual environment until you are ready to go live!
✅ And much, much more!
What are vaccine stocks?
The need for vaccines dates back for centuries, as early as 1000 CE in China. It was the first vaccine developed by Edward Jenner in 1796, which used cowpox material to create immunity to smallpox, that the practice became much more widespread. After Louis Pasteur's rabies vaccine in 1885, the development of antitoxins and vaccines against the world's most common diseases such as diphtheria, cholera and typhoid quickly followed.
However, the need for vaccines continued in both the 20th and 21st centuries. The first vaccine for malaria was only found in 2015, for Ebola it was in 2019. And now most recently, the first vaccine for the coronavirus outbreak in 2019 was only found in 2020. But now, instead of single scientists developing vaccines for diseases, there are teams of scientists employed by some of the largest pharmaceutical and biotechnology companies.
The revenues created by developing vaccines are enormous and have always been the subject of contention among anti-pharmaceutical activists. The chart below, shows the global vaccine revenues in 'million US dollars' of the top 10 pharmaceutical and biotechnology companies, with the dark blue rows indicating vaccine revenues from 2017 and lighter blue rows projected vaccine revenues for 2024.
Source: Statista, November 2020
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Pharmaceutical vs Biotechnology vaccine stocks
In the graphic above showing the top ten companies for vaccine revenue, it comprises a mixture of pharmaceutical companies as well as biotechnology (biotech) companies. When investors are deciding what the top vaccine stocks are, it is important to understand the distinction between the two to identify where the opportunities could be.
For example, in 2020 it was biotechnology companies that were some of the best performing coronavirus vaccine stocks - especially the ones that merged with larger pharmaceutical companies. So what is the difference between pharmaceutical and biotech vaccine company stocks? The primary difference is in the method of producing a drug or vaccine.
▶️ Pharmaceutical companies typically create medicines from chemical, synthetic or plant based compounds. The job of a pharmaceutical company is to provide medicines that help to cure or manage diseases and protect from infection.
▶️ Biotechnology companies typically use living organisms such as bacteria, yeast and other cells to manufacture a drug or vaccine. These companies tend to be a lot smaller than pharmaceutical companies and mainly focus on genetic research to develop products.
Understanding the difference is huge for the investor as each type of company has a vastly different risk profile. Let's have a look at some of them!
Risk profiles for Pharma vs Biotech companies
Biotech companies tend to perform best in the early stages of research and clinical trials. They have the ability to move fast and are able to take risks to find a drug or vaccine to market. Pharmaceutical companies, on the other hand, are much better at the development work for drugs and vaccines after phase three trials and beyond as they do not have the capacity to develop new drugs anymore.
The average cost of bringing a drug to market is around $2.4 billion and 90% of drug development programmes fail. This is why big pharma tends to go on buying sprees, snapping up the drugs developed by faster-moving biotech companies, as well as, acquiring the biotech company or partnering with them.
For example, in 2018 pharmaceutical giant Pfizer entered into a multi-year research and development contract with German biotechnology company, BioNTech. They later went on to develop a coronavirus vaccine and signed contracts to produce 300 million doses of its SARS-CoV-2 vaccine for the European Union.
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What are the best coronavirus vaccine stocks to buy?
The coronavirus outbreak started in late 2019 and caused a worldwide pandemic in 2020. Many analysts believe the virus will be around for years as it genetically mutates into new strains. The race in finding the best Covid 19 vaccine stocks created some huge swings in the market during the pandemic.
While it may be difficult to find the absolute best - as vaccine stocks do tend to be volatile in nature - investors can be prepared by focusing on companies who are leading the race in developing a coronavirus vaccine as well as the companies who are invested into the coronavirus vaccine pipeline as these stocks may have the potential to outperform their peers. Let's take a look at a few.
✴️ #1 Pfizer (PFE) / BioNTech (BNTX)
Pfizer was founded in 1849 and has a global portfolio of medicines and vaccines. The Pfizer Innovative Health (IH) division focuses on commercialising medicines and vaccines. The Pfizer Essential Health (EH) division focuses on research and development as well as its legacy brands.
The company is high on the list for coronavirus vaccine stocks as in November 2020 they announced their vaccine candidate - developed in partnership with BioNTech - had a 90% effectiveness in preventing Covid 19 during phase three trials. The vaccine requires two doses, three weeks apart with a possible $20 price tag for each dose.
The vaccine uses jab technology known as mRNA which provides the body a genetic instruction for the person's cells to produce the required antigens and generate an immune response. However, as mRNA has not been used before in vaccines it does pose some problems. The company's vaccine needs to be stored at around -70C, or -100F, for optimal efficiency and needs to be mixed with another liquid first before being administered.
Source: Admiral Markets MetaTrader 5, #PFE, Monthly - Data range: from 1 Aug 2005 to 26 Nov 2020, accessed on 26 Nov 2020 at 17:50 GMT. Please note: Past performance is not a reliable indicator of future results.
In the above monthly price chart of Pfizer's share price, it's clear to see the long-term uptrend that has developed since 2009 with some significant declines starting from late 2018. Price has remained bullish as buyers stepped in at the long-term trend line support as shown by the ascending black line.
The red wavy line is the 50-period exponential moving average (EMA) and the green wavy line is the 100-period exponential moving average. This indicator helps traders and investors to understand what the trend is. As the faster moving average (50 EMA) is above the slower moving average (100 EMA) it represents bullish conditions in which the trend is up.
Many investors got excited with Pfizer and BioNTech's coronavirus vaccine announcement as it was the first company to provide positive phase three trial results. However, challenges do remain in how it could be administered. Other pharmaceutical companies announced they will sell the drug on a not-for-profit basis to governments. Pfizer has taken a different stance and is using it as a commercial opportunity whereby the two entities are set to rake in nearly $13 billion in global sales from their vaccine.
✴️ #2 Moderna (MRNA)
Moderna is an American biotechnology company that was founded in 2010. The company is much smaller and less well-known than some of the larger pharmaceutical giants and focuses its efforts on vaccine technologies based exclusively on the mRNA technology.
As a company, Moderna has struggled in the past with unsuccessful trials and a change in strategic direction causing industry experts to question the viability of the company. Nevertheless, in 2018 the company embarked on the largest Initial Public Offering (IPO) for the biotech sector raising $600 million for 8% of its shares giving it a valuation of $7.5 billion - even though they reported losses of $1.5 billion at the time.
As of November 2020, the company was worth an estimated $35 billion due to its advancements in developing a coronavirus vaccine. The company's share price gained much of that valuation in just a few months of 2020, as shown below in the weekly price chart of its stock price:
Source: Admiral Markets MetaTrader 5, #MRNA, Weekly - Data range: from 17 Feb 2019 to 26 Nov 2020, accessed on 26 Nov 2020 at 18:50 GMT. Please note: Past performance is not a reliable indicator of future results. Five-year data not available.
While the price for a dose at $38 is the highest of all the potential vaccine candidates it does not have the same storage and delivery issues that Pfizer and BioNTech have. In fact, Moderna's vaccine which requires two doses four weeks apart can potentially last up to 30 days in a household refrigerator and potentially up to six months in a household freezer. It can also be administered using widely available vaccine delivery systems with no dilution required before being administered.
Investors have clearly liked the development of the Moderna vaccine stock trend. Price action in the chart above shows the uptrend that first started in the middle of 2019 but then accelerated sharply in 2020. Some analysts believe the high price per dose may put off some buyers. However, the US government announced it is buying 100 million doses from Moderna, while the UK government announced it is buying 5 million doses.
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✴️ #3 AstraZeneca (AZN) / Oxford University
AstraZeneca and the University of Oxford announced its coronavirus vaccine phase three results on 23 November, 2020. The vaccine developed from this collaboration works like a traditional inoculation whereby a protein of the virus is injected into a human where the immune system will build a response if the real virus is contracted.
The trial found that taking two doses of its vaccine has a 62% effectiveness. However, a half dose followed by a full dose four weeks later led to an effectiveness of 90%. AstraZeneca have already stated they will not sell the vaccine for a profit and will be just under £3 per dose making it the most cost-effective vaccine and available for all countries.
However, the AstraZeneca/Oxford vaccine has faced sharp criticism from the chief of the White House's Operation Warp Speed programme, Moncef Slaoui, who believe the results only show effectiveness because they tested the lowest risk group. This highlights how things can turn quite quickly for pharmaceutical and biotech companies.
Source: Admiral Markets MetaTrader 5, #AZN, Monthly - Data range: from 1 May 1993 to 26 Nov 2020, accessed on 26 Nov 2020 at 19:50 GMT. Please note: Past performance is not a reliable indicator of future results. Five-year data not available.
In the long-term monthly price chart of AstraZeneca's share price, it is clear to see a very choppy uptrend. While its share price has been moving higher there have been significant declines at various points. Taking a long-term view and utilising strong risk management techniques is essential in dealing with such choppy share prices.
However, finding trading or investing opportunities on stocks like AstraZeneca can be more simplified by using the Technical Insight Lookup Indicator in the Admiral Markets MetaTrader 5 Supreme Edition platform. This indicator actually finds actionable trading ideas for thousands of different instruments across asset classes such as stocks, commodities, indices and foreign exchange.
For example, the screenshot below shows all the short-term, intermediate-term and long-term technical events that have developed on AstraZeneca's share price:
A screenshot showing an example of searching for 'AstraZeneca' in the Trading Central Technical Insight Lookup indicator in the MetaTrader 5 Supreme Edition platform provided by Admiral Markets.
This type of unique indicator could be a great addition to your toolbox and help save a lot of time in research and analysis. The combination of looking at the bigger picture and finding good quality themes to invest in and technical stock market research is very powerful.
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Other notable mentions when choosing the best coronavirus vaccine stocks include the following companies which are still in the development phase or in phase one or two trials:
But there are also other top vaccine stocks to consider, such as those in the vaccine distribution pipeline. Once governments have approved a vaccine it then needs to be distributed to the different regions within a country. This would usually be to state or county leaders who are then responsible for distributing the vaccine to residents.
The logistics involved in this may serve companies such as FedEx who was a key player in the distribution of the swine flu vaccine nearly a decade ago. The US government has already made deals with CVS and Walgreens to give vaccines to residents situated in long-term care facilities which could make these stocks interesting to watch as well.
However, many investors may choose to focus on broader investments by using ETFs to gain exposure to the overall biotechnology or pharmaceutical sector.
How to use ETFs to capitalise on the top vaccine stocks
During the coronavirus pandemic of 2020, it was biotech stocks that outperformed pharmaceutical stocks. However, keeping track of all the developments with a company's vaccine, how its trials are going and then being able to respond quickly enough to any market movements isn't a suitable way to invest for most people.
This is one reason there has also been a huge increase in demand in biotechnology ETFs. This is essentially a product which tracks an underlying index. For example, the iShares Nasdaq Biotechnology ETF tracks the performance of the biotechnology companies listed on the NASDAQ stock exchange.
The ETF itself has 205 biotech companies within it, with some of the most well-known comprising the top-ten holdings, as shown below:
Source: iShares, 27 November 2020
As biotechnology companies are at the forefront of vaccine research, a Biotech ETF is one way to gain exposure to the broader sector. You can learn more about this in the ' How to Invest in Biotech Stocks and a Biotech ETF' article.
Below is the long-term, monthly price chart of the iShares Nasdaq Biotechnology ETF:
Source: Admiral Markets MetaTrader 5, #IBB, Monthly - Data range: from 1 Jul 2005 to 27 Nov 2020, accessed on 27 Nov 2020 at 9:50 GMT. Please note: Past performance is not a reliable indicator of future results. Five-year data not available.
It's clear to see the long-term uptrend that has developed in the biotechnology sector from the chart above. The 50-period, 100-period and 200-period exponential moving averages are all moving higher confirming the uptrend. While the price has been volatile, it's clear to see the importance that investors have placed on the need for biotech companies.
One way to navigate the volatility is to make sure you have access to the right type of trading products. By using Contracts for Difference (CFDs) to trade ETFs, as well as stocks, you can potentially profit from both rising and falling markets.
▶️ Many investors choose to short-sell CFDs to hedge against any declines in their investment portfolios. The theory is that any losses made on long-term investments would be offset by gains made on any short positions. But, this is an advanced way of trading and investing.
Fortunately, with Admiral Markets you can use CFDs to speculate on a wide variety of asset classes including stocks, ETFs, indices, commodities and foreign exchange markets. You can get started today by opening a live account from clicking on the banner below:
Invest in Covid vaccine stocks in just five steps
Once you have found the right vaccine stock or ETF you want to invest in or trade on, the next step is to open a price chart of the instrument, to then open a trading ticket which can be done in just five steps:
- Open your MetaTrader 5 trading platform provided by Admiral Markets. Alternatively, start your free download here.
- Open the Market Watch window by selecting View from the top menu and selecting Market Watch.
- At the bottom of this window, type in the instrument you wish to trade on the last line with the + icon. Different instrument names will be pre-populated for you to select.
- Once selected, simply drag the symbol onto the price chart to view its live and historical price.
- Open a trading ticket by right-clicking on the chart and selecting Trading and then New Order. A trading ticket will open up for you to input your own entry, stop loss and take profit levels as well as your position size.
A screenshot showing the MetaTrader 5 trading platform provided by Admiral Markets with a trading ticket open on the chart.
Why invest in vaccine stocks with Admiral Markets?
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Admiral Markets is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8,000 financial instruments via the world's most popular trading platforms: MetaTrader 4 and MetaTrader 5. Start trading today!
This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or recommendation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.