Many Americans have already received their checks from a huge economic stimulus bill recently signed into law. This legislation also earmarked billions of dollars to efforts that could benefit some healthcare stocks. In this Motley Fool Live video recorded on March 10, Fool.com contributors Keith Speights and Brian Orelli discuss which COVID-19 stocks could be winners with the $1.9 trillion stimulus bill.
Keith Speights: The big news in Washington, D.C., is that Congress just passed the $1.9 trillion stimulus package. There are a lot of zeros with that.
The headlines obviously are focusing on the impact to most Americans. A lot of people are going to be receiving another $1,400 check and the goal of course is to stimulate the economy. However, there are some components in this legislation that specifically impact the healthcare industry and potentially impact healthcare stocks. We're going to lead off talking about this stimulus package. Some of the things that has buried in the details of the legislation that impact healthcare.
There's a $47.8 billion funding to improve the detection, diagnosis, tracing, and monitoring of COVID-19. There's $7.5 billion to promote, distribute, administer, monitor, and track COVID-19 vaccines. There's a little over $6 billion to aid in the research and development, manufacturing, and production of new vaccines as well as treatments for COVID-19 and for the U.S. to purchase those products. There is $1.75 billion in this bill to strengthen and expand activities and workforce related to genomic sequencing, analytics, and disease surveillance. There's a billion dollars or so to strengthen vaccine confidence and about $500 million for the FDA to continue its quick evaluations of COVID-19 vaccines, therapeutics, and diagnostics.
Brian, with all that being said, which COVID-19 stocks do you think might be the biggest winners from this latest $1.9 trillion stimulus package.
Brian Orelli: I mean, clearly the money for the detection and diagnosis of COVID, It's going to help the testing companies. I'm thinking Fulgent Genetics (FLGT 0.66%), ticker there is FLGT and Quidel (QDEL 1.34%) ticker there is QDEL. There's certainly plenty of other ones, those who are most reliant, I think on COVID-19 testing right now.
It's hard to see whether vaccine makers -- I'm thinking Moderna (MRNA 1.01%) and Pfizer (PFE 0.78%) -- are going to benefit from the money for administering the test since they've already pre-sold all their doses. But it will get the shots in the arm quicker, but I'm not sure if that's going to help the companies. But there's many for R&D for vaccines and for drugs. I think that could help.
Maybe it helps the companies that are a little further behind, I don't know. I feel like the companies that are in the forefront are probably going to be the most likely to develop follow-on doses for the variants, rather than companies that are further behind.
Genomic sequencing, obviously Illumina (ILMN 0.65%), there would be a big beneficiary because they're selling machines that do the genomic sequencing.
Then the bolstering of the FDA budget seems like it might help all drugmakers. Maybe the non-COVID-19 companies, especially if FDA has been fudging their budget a little bit and pulling money away from that to deal with all the COVID-19 things. Having more money will now allow them to spend that money, helping other companies developing non-COVID-19 drugs and devices. They offer advice as companies are in the process of developing new things. So companies getting more advice should be helpful to them in the long run.
Speights: Now, Brian, I reeled off some pretty big dollar amounts. How much do you think this bill is really going to help these stocks? Is this a huge impact, a moderate impact, small impact? What do you say?
Orelli: A billion dollars is basically what a company makes off of a really good drug. So I don't think a billion dollars or $7 billion split between seven companies is really going to make or break any of these companies. It's helpful but not a complete game changer for any specific company would be my guess.
Speights: I'm putting you on the spot here, Brian, but of the companies you mentioned, if you were just going to take a guess as to which single stock might be most helped by this legislation, which one do you think might be the biggest winner?
Orelli: Well, I think the testing companies, it's the hardest to value, because we just don't know how much testing there's going to be in the future. I think the money for that, and it's also the largest amounts that you listed, it's $47.8 billion, the government is going to throw into that. If that money results in testing going on longer, that's going to benefit the testing companies the most, because I think they're in the less precarious situation where they don't know how long this huge amount of testing is going to last.
Speights: Yeah. That's a good answer, I think, because you and I've talked about Fulgent Genetics as an example. That company had just a monster quarterly report recently and the stock soared, but then gave up most of the gains, I think, mainly because investors were concerned about how long the gravy train will go on with COVID-19 testing, and with the government pouring this much additional money into it, that's good news for companies like Fulgent.
Orelli: If you look at a chart like Quidel's, it's this rollercoaster.
Orelli: It goes up because there's a lot of testing and then there's vaccines and it goes down. Then we get another surge and it goes back up. Investors just don't know how to value it because they don't know how long it's going to last.