If we only looked at last year, AstraZeneca (AZN -0.34%) outperformed Pfizer (PFE 0.89%). The British drugmaker's shares only increased by 0.26%. However, that was better than Pfizer's 0.82% decline. Neither Pfizer's extraordinary success with its COVID-19 vaccine BNT162b2 nor AstraZeneca's progress with its rival vaccine AZD1222 was enough to spark solid gains for either stock.
But 2020 is in the past. You could even say that 2020 is hindsight, to flip an often-used phrase. Which of these coronavirus stocks is the better pick now? Here's how AstraZeneca and Pfizer stack up against each other.
The case for AstraZeneca
Let's start with the prospects for AstraZeneca's coronavirus vaccine. AZD1222 has already won emergency use authorization (EUA) in the U.K. and India. The company hopes to gain more EUAs, including in the U.S., in the coming months.
There's no question that AZD1222 will rake in a lot of money for AstraZeneca. However, the company has committed to selling the vaccine at cost while the pandemic is ongoing. It will also need to convincingly demonstrate high efficacy in its U.S. late-stage study to be competitive with Pfizer and Moderna.
Still, AZD1222 could be very profitable for AstraZeneca over the next few years. Meanwhile, the company already has several powerhouse products on the market that are delivering strong sales growth. In particular, sales continue to skyrocket for cancer drugs Imfinzi, Lynparza, and Tagrisso.
AstraZeneca faces some headwinds with sluggish sales for blood thinner Brilinta and declining revenue for type 2 diabetes drug Bydureon. However, another type 2 diabetes drug -- Farxiga -- is a huge winner that's picking up momentum.
The company's pipeline includes 172 programs. These include nine new candidates in late-stage testing. AstraZeneca has an even greater number of late-stage programs targeting additional indications for drugs already on the market. Its pending acquisition of Alexion should boost growth significantly.
Many investors will like AstraZeneca's dividend yield of close to 2.8%. However, the drugmaker hasn't increased its dividend payout in recent years.
The case for Pfizer
Bernstein analyst Ronny Gal predicts that Pfizer and its German partner BioNTech will make more than $14 billion this year from sales of COVID-19 vaccine BNT162b2. Pfizer will pocket half of that total.
What remains to be seen is how much Pfizer will make from the vaccine on a recurring basis. That depends largely on the duration of immunity provided by BNT162b2 and the competitive landscape. However, it's probably safe to assume that the vaccine will remain a blockbuster for Pfizer for several more years.
Pfizer's growth has been anemic in recent years. That should soon change, though. The company spun off Upjohn and merged it with Mylan to form a new entity, Viatris. The result of this transaction is that Pfizer no longer has older drugs with declining sales such as Lyrica in its lineup. Pfizer expects its revenue to grow by around 6% annually now, with average adjusted earnings-per-share growth of around 10% -- excluding the impact of BNT162b2.
This growth will be fueled by several products with strong sales momentum, notably including blood thinner Eliquis, cancer drug Xtandi, and rare-disease drug Vyndaqel. In addition, Pfizer has several newer products such as melanoma drugs Braftovi and Mektovi that are rising stars.
Like AstraZeneca, Pfizer has a deep and robust pipeline. The company currently has 92 programs in clinical development, including 21 in late-stage testing and six awaiting regulatory approval. One of the most important of these candidates is PF-06482077, a 20-valent pneumococcal conjugate vaccine that Pfizer hopes will be a worthy successor to blockbuster vaccine Prevnar13. Potential U.S. approval of the vaccine candidate is expected in June 2021.
Pfizer has long been a favorite for income-seeking investors. Its dividend currently yields close to 4.2%, although that's likely to slip a little as a result of the Viatris transaction.
Better coronavirus stock?
There's one area that wasn't mentioned above: valuation. AstraZeneca's shares trade for 20 times expected earnings. Pfizer's forward price-to-earnings multiple is only around 12.
I like both of these big pharma stocks. My view is that the better pick depends on your investing style. Value investors and income investors will probably prefer Pfizer. AstraZeneca might have an edge with growth investors. As for which is the better coronavirus stock (basing the choice strictly on the companies' respective COVID-19 programs), I'd go with Pfizer.