Drug developers and technologies that enable new vaccines, especially to address the coronavirus, are benefiting the most in this pandemic.
These developments have been a key factor in driving up the price of some companies since late 2020 and so far in 2021.
Beyond this “summer” that pharmaceutical stocks are experiencing, doubts are beginning to be present regarding the future of this sector after vaccinations advance. The question is whether these companies, which are so strong today, will be able to sustain their current valuations once the pandemic is over.
To answer this question, the first thing to do is to make a comparative analysis of the performance of these companies with the current data and those of the last year. Especially note that the trend in the stock market has flattened for companies that develop pharmaceutical products, which would show a maturation of the immunization plan in the major powers. On the other hand, we have to see if the path is holding without too much change.
Lead pharma stocks: 2021 vs 2020
You can take the entire 2020 stock market value and compare it to the current year to analyze if the numbers match.
American Moderna, for example, was instituted as the company that stands out the most after its advance by more than 199 percent on Wall Street.
On the Pfizer side, it managed a gain of nearly 25 percent; and Johnson & Johnson advanced just 15 percent.
UK-based AstraZeneca, in contrast to the above, lost 2 percent.
Current data, extrapolating each month’s results, are marking a trend similar to last year’s, but more modest. Precisely, Moderna added nearly 40 percent in June, Johnson & Johnson is up 5 percent, Pfizer is up 3 percent and AstraZeneca is losing just under 2 percent.
Moderna and the outlook
The current print is similar to what was seen in 2020. Analysts are anticipating that the good momentum of the shares of drug product development companies in the market, for now, is not going to end.
Financial companies, such as RBC Capital Markets, have noted that bullish positions in these markets will still be maintained, but it will depend on whether more doses of vaccines will be needed later on.
They noted that companies such as Pfizer and Moderna led immunization trades in the major power markets and their balance sheets were rewarded. However, they need the whole process to be confirmed and the new doses to be applied, with the aim of continuing those advantageous dynamics for pharmaceutical stocks.
This is a situation that would favor more the two companies that are consolidating as the ones that produce the most inoculations and that these are the most demanded by the governmental authorities of the different countries: Pfizer and Moderna.
There are signs of this since Moderna since this month has been associated with the exclusive listing of shares that are listed on the S & P 500, the most relevant index on Wall Street.
While the latest rise in Moderna’s stock value is relevant to investors, Mike Yee of New York investment bank Jefferies Group LLC has noted that the drugmaker’s share price surpassed the $100 billion mark, but he’s not sure this will be sustained, at least at the same pace.
The analyst added that Moderna could continue its growth in the market, albeit at a slower rate than it has been doing so far.
He also said the firm expects sales of between 205 million and 260 million doses of its flagship product, the RNAm/1273over the next three months, which is at the midpoint of its guidance (located at 225 million)and is expected to generate more than $4 billion.
In relation to next year, the expert warned that what could complicate things is that there could be an overstock, although so far, the U.S. has been taking orders since the vaccine is a purely political issue.
In addition to Moderna, Pfizer
Something similar is happening with Pfizer shares. The consensus projects earnings of nearly $75 billion for the world’s largest laboratory, about 58 percent above 2020.
The specialists indicated that in the analyses recently carried out, it is reflected that there will be changes in the market so that it can be considered that there will be positive modifications in the value of Pfizer’s papers from the optimism about the firm’s commercial prospects. Likewise, it is understood that it will be with a more moderate trend, in a softer mode.
Prospects for 2022
Future achievements of the labs’ actions relate to the storage that is going to happen with next year in mind. This is the key to everything.
The Jefferies Group LLC specialist said they believe orders to make stock are going to happen and continue to post huge gains, and that companies should prepare for that.
For AstraZeneca Laboratories and Johnson & Johnson, meanwhile, the outlook is somewhat different, analysts see it.
This is because its vaccines are not taken into account by EU countries, although they are going to be important for less developed markets, such as Latin America.
The point to keep in mind is that it is not known whether this (sales in peripheral countries) is what these two pharmaceutical companies need for their balance sheets to improve.
Canadian investment banking indicated in this regard that these are the labs that are producing the most uncertainty about future situations and the relationship with their vaccines. Canadian investment banking indicated in this regard that these are the labs that are producing the most uncertainty about future situations and the relationship with their vaccines.