It seems we're nearing the finale of the coronavirus vaccine race. Eight programs have reached late-stage clinical testing, and the U.S. has vowed to help usher a possible vaccine to market by January.
But that doesn't mean opportunities to invest in companies involved in coronavirus work are over. As countries test populations and stockpile vaccines and treatments, there's still runway for success.
Image source: Getty Images.
In recent months, clinical-stage biotech companies have stolen the spotlight in the coronavirus fight. But some of the larger players are also worth a look. They usually won't post the same spectacular short-term gains as their biotech rivals, but they do offer the security of a vast portfolio of revenue-generating products. And this is exactly the type of company I recommend buying this month.
Here are three of my favorites:
Pfizer
A day after Moderna (MRNA -1.39%) launched the first human clinical trial of an investigational coronavirus vaccine, Pfizer (PFE -0.12%) announced its collaboration with BioNTech (BNTX -0.27%) on a vaccine candidate. Why is this significant? Because both potential vaccines are based on messenger RNA technology. Like Moderna, BioNTech is an expert in the field. While Moderna was clearly ahead at the start, the Pfizer/BioNTech team has caught up. Moderna announced the start of its phase 3 trial on July 27. That's the same day Pfizer and BioNTech announced the beginning of their phase 2/3 trial.
The rivals also have both reported positive interim results from their vaccine candidates in elderly patients, a key population group that is vulnerable to the coronavirus. Moderna hasn't said when it may apply for regulatory approval, but the Pfizer/BioNTech pair say they might be ready "as early as October."
Unlike Moderna, though, Pfizer's shares haven't soared more than 200% this year. They trade at a reasonable 14 times trailing 12-month earnings and are down 5% year to date.
AstraZeneca
AstraZeneca's (AZN -0.25%) story is similar to that of Pfizer. The big pharma company also entered the vaccine race through a partnership, joining forces with the University of Oxford in late April. Researchers there used their expertise from work ingon a potential vaccine for Middle East Respiratory Syndrome -- another coronavirus -- to quickly produce a candidate for COVID-19.
AstraZeneca is considered another leader in the race, and in May the company began recruiting candidates for a phase 2/3 trial. Like other players, AstraZeneca hasn't reported data from late-stage trials yet. But interim results from the phase 1 study were positive, showing levels of neutralizing antibodies (which block infection) in all participants.
AstraZeneca's revenue had dropped in recent years amid generic competition for its older drugs, but the company is back on track. Revenue last year increased 10%, and in the first half of this year, new medicines made up half of total sales. AstraZeneca is trading at 27 times expected earnings, compared with 68 times trailing 12-month earnings. Considering new medicine growth and potential coronavirus vaccine prospects, AstraZeneca looks like a good deal today.
AZN PE Ratio (Forward) data by YCharts
Abbott Laboratories
The U.S. Food and Drug Administration (FDA) has granted emergency use authorization to all six of Abbott Laboratories' (ABT -0.59%) tests for COVID-19, the illness caused by the novel coronavirus.
Abbott sells molecular tests that determine whether a person has the coronavirus now, as well as serology tests that show if a person has been infected in the past. Most recently, Abbott launched an antigen test to detect current infection. This type of test is particularly interesting because it's inexpensive, portable, and offers a result in 15 minutes.
Abbott's diagnostics and medical businesses have suffered during the coronavirus outbreak because patients and doctors have postponed other medical tests and procedures. In the meantime, though, the COVID-19 tests have limited revenue declines. In the second quarter, molecular testing revenue soared more than 233% thanks to COVID-19 tests. That helped the diagnostics business lift sales by 4.7% in the period. Still, total company revenue fell 5.4%.
I see declines in non-COVID-19 medical testing and surgical procedures as a temporary situation. Once patients and hospitals return to their regular routines, the healthcare company's diagnostics and medical devices businesses will benefit. Abbott's annual revenue has been on the rise since 2013, and after the coronavirus crisis has passed, the trend is likely to continue.
