Bernstein analyst Ronny Gal predicts coronavirus vaccines will generate $40 billion in sales in 2021. What's especially astounding about this number is that the market didn't exist at all until December.
Big markets create big opportunities for investors. But what are the best ways to seize this particular opportunity? Here are three fantastic coronavirus stocks to buy right now.
1. Johnson & Johnson
Johnson & Johnson (NYSE:JNJ) should announce results from a late-stage study of its COVID-19 vaccine, JNJ-78436735, very soon. It's no exaggeration to state that this vaccine could be a game changer if it proves to be safe and highly effective. Unlike all of the other leading coronavirus vaccines, JNJ-78436735 requires only a single dose.
What about J&J's commitment to sell its COVID-19 vaccine at cost during the pandemic? Sure, this will mean that the healthcare giant's earnings won't be boosted over the near term, even if JNJ-78436735 is successful. However, the pandemic won't last forever. A single-dose vaccine could generate billions of dollars in sales for J&J over the next few years.
More importantly, JNJ-78436735 isn't the main reason to consider buying Johnson & Johnson shares. An even more compelling argument for investing in J&J is that it's the biggest player in healthcare, one of the biggest sectors with strong long-term growth prospects. The company also provides significant diversification across the healthcare sector as a leader in consumer health, medical devices, and pharmaceuticals.
Another really good reason to buy Johnson & Johnson stock is its dividend. The company is a Dividend King -- an elite group of S&P 500 members that have increased their dividends for at least 50 consecutive years. For income investors looking for stability, there's simply no better coronavirus vaccine stock around than J&J.
When the history books are written about the pandemic, Pfizer (NYSE:PFE) will almost certainly be mentioned. The big drugmaker moved quickly to partner with German biotech BioNTech (NASDAQ: BNTX) in early 2020. The two companies' COVID-19 vaccine went on to become the first to win emergency use authorization in the U.S.
That vaccine, Comirnaty (previously known as BNT162b2), could make $14 billion and perhaps more this year. Pfizer will split sales 50-50 with BioNTech. The partners are working to develop a freeze-dried version that doesn't require ultracold storage, which could be ready later in 2021. This version could set the stage for Pfizer to make huge recurring revenue with Comirnaty over the long run. Unlike Johnson & Johnson, Pfizer will profit from its COVID-19 vaccine from the beginning.
Even without including the positive impact from Comirnaty, Pfizer expects to deliver adjusted annual earnings growth of around 10% over the next few years, with annual revenue growth of around 6%. Those are risk-adjusted projections, so the growth rates aren't dependent on all of Pfizer's pipeline candidates panning out.
Don't overlook Pfizer's dividend. The company isn't dividend royalty like J&J, but its dividend yields more than 4%.
Risk-averse investors will probably like Johnson & Johnson and Pfizer. But what about more aggressive investors? Novavax (NASDAQ:NVAX) could be just the ticket.
Like J&J, Novavax expects to soon report late-stage results for its COVID-19 vaccine candidate. There's one catch, though: That late-stage study is being conducted in the U.K. Novavax didn't start its U.S. late-stage study until late December, so it will be several more months before results are available from it.
Still, Novavax could be a huge winner in the coronavirus vaccine market. Bernstein's Ronny Gal thinks the biotech will rake in $3.8 billion in sales this year. If he's right, Novavax's market cap will skyrocket a lot higher than its current level of around $8 billion.
Novavax also has another promising candidate in experimental flu vaccine NanoFlu. It's already sailed through late-stage testing. The company only needs to complete a manufacturing lot consistency trial to file for U.S. approval. With two potential blockbusters waiting in the wings, I think Novavax's risk-reward profile arguably makes it the best coronavirus stock for 2021.