Pfizer ( PFE 2.32% ) and Moderna ( MRNA 1.74% ) are waiting on pins and needles to receive emergency use authorizations (EUA) for their COVID-19 vaccines. And investors are anxiously awaiting the big financial impact these vaccines will make on the companies' top and bottom lines. In this Motley Fool Live video recorded on Dec. 3, 2020, Healthcare and Cannabis Bureau Chief Corinne Cardina and Fool.com writer Keith Speights discuss when Pfizer and Moderna are likely to be able to record revenue from their COVID vaccines.
Corinne Cardina: In terms of showing investors the money, these companies have signed contracts with a lot of different governments and organizations to provide doses of these vaccines upon these approvals. Do we know when that revenue is going to be recognized? When can investors expect that money to land in terms of quarterly earnings?
Keith Speights: The short answer is we don't know exactly. Those deals were basically, you can look at them as advance purchase orders. Pfizer, for example, said the U.S. government would pay $1.95 billion upon the receipt of the first 100 million doses. Probably what's going to happen is, the money will begin to flow once receipt of those doses, those contractual amounts are turned over.
In the case of Pfizer, for example, that first 100 million doses might not be delivered to the U.S. until later in the first quarter, and that's when the money will come through. I think it's possible that we could see revenue recognized as early as the first quarter of 2021, but it's also possible that the revenue might not be recognized until Q2. Just depends on how quickly they fulfill that contractual requirement.
Corinne Cardina: Definitely. But in terms of an investment, these amounts of the contract, dollar signs, they've been available. So do you think that that revenue is already priced into a stock like Moderna and Pfizer?
Keith Speights: Sure, I think that's absolutely the case. That once those deals were announced, investors immediately just mentally put that money in the bank for Pfizer and for Moderna. So yeah, I think they're already priced into the shares.
But keep in mind that, especially in the case of the U.S. government, but I think it's also the case in Europe as well, that these governments have negotiated an option to increase their purchases. I think that's very likely in some of these cases. We could see much more money flow from the US and from Europe for both Pfizer and Moderna.
Corinne Cardina: That option could definitely be a catalyst if they are exercised. That'll be interesting to watch.