Pfizer (PFE -0.35%) and Moderna (MRNA -0.85%) were the first to win U.S. Emergency Use Authorization (EUA) for their respective COVID-19 vaccines. This success has made Moderna a huge winner for shareholders, with the stock skyrocketing more than 570% over the last 12 months. It's been a different story for Pfizer, though, with the big drugmaker's shares rising only around 15% during the same period -- well below the return of the S&P 500 index.
But which of these two COVID-focused stocks is the better pick now? Here's how Pfizer and Moderna stack up against each other.
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The case for Pfizer
Pfizer stated in its Q4 update that it expects sales of COVID-19 vaccine BNT162b2 to reach $15 billion this year. However, the company has picked up additional orders since then. The actual total will likely be well above that level.
To be sure, Pfizer must split profits on the vaccine with its partner, BioNTech. Still, though, the big drugmaker is poised to enjoy tremendous top- and bottom-line growth thanks to BNT162b2.
The good news is Pfizer is set to deliver solid growth even without the COVID-19 vaccine. In November, the company spun off its Upjohn unit and merged it with Mylan to form a new entity, Viatris. As a result of this transaction, Pfizer no longer has a basket of older drugs that have lost exclusivity weighing on its growth. The company projects revenue growth of at least 6% and adjusted earnings-per-share growth of at least 10% over the next few years -- excluding any impact of its COVID-19 vaccine.
Pfizer has multiple growth drivers in addition to BNT162b2. Sales continue to climb for blood thinner Eliquis, cancer drugs Ibrance and Xtandi, and rare heart disease drug Vyndaqel. The company's biosimilar portfolio is gaining momentum.
Pfizer's pipeline includes close to 95 clinical programs, with over 30 of them either awaiting regulatory approval or in late-stage testing. And the company has gotten better at developing drugs, with its end-to-end success rate for advancing candidates all the way through to approval trouncing the industry average.
Nearly every investor will probably like Pfizer's dividend. Its dividend yield currently stands at 4.4%. While the company plans to reduce its dividend payout in lockstep with Viatris declaring a dividend in the near future, Pfizer's yield should still be quite attractive.
Even with its solid growth prospects and juicy dividend, the big pharma stock remains a relative bargain. Shares trade at less than 11 times expected earnings.
The case for Moderna
Moderna thinks that it will make at least $18.4 billion this year from its COVID-19 vaccine mRNA-1273. Unlike Pfizer, the biotech won't have to share its big haul with another company.
This sets Moderna up for the best year in the company's history in 2021. Look for the biotech to generate massive profits after over 10 years of losing money. You can also expect the company to pour much of its newfound wealth back into its pipeline.
Moderna is already planning to advance its second pipeline candidate into late-stage testing. Its experimental cytomegalovirus (CMV) vaccine mRNA-1647 showed promise in a phase 2 clinical study. The company believes that it could generate peak annual sales of between $2 billion and $5 billion if approved.
There are also several other exciting vaccines in Moderna's pipeline. Moderna intends to begin phase 1 studies of three flu vaccine candidates later this year. It's preparing to conduct a phase 2 study of Zika virus vaccine mRNA-1893 in 2021. The biotech is also moving forward with advancing other programs into clinical testing this year, including experimental HIV vaccines and a vaccine targeting the Epstein-Barr virus.
The big bucks generated by mRNA-1273 should also fund a lot more development soon. Moderna CEO Stephane Bancel has stated publicly that he'd like to expand the company's pipeline to feature up to 50 messenger RNA (mRNA) programs in clinical testing.
Based on Moderna's historical performance, the stock is extremely expensive. However, the biotech could benefit from strong recurring revenue from its COVID-19 vaccine and successor vaccines for years to come. Its pipeline also holds the potential to produce additional growth drivers over the next decade and beyond.
Better COVID stock?
If we based a decision between Pfizer and Moderna solely on their COVID-19 vaccines, I'd say that Moderna would be the clear winner. The company will almost certainly make a lot more money from its COVID-19 vaccine than Pfizer will because it doesn't have to share profits with a partner.
However, we really need to look at the bigger picture in choosing between these two stocks. My view is that the decision hinges on what your investing style is.
Income-seeking investors will obviously prefer Pfizer since it offers a dividend while Moderna doesn't. Risk-averse investors will also likely find that Pfizer is a better fit. The company already has multiple blockbusters on the market and has a long track record of success.
On the other hand, my view is that aggressive investors will want to consider Moderna. The stock could be highly volatile over the near term. But if Moderna's pipeline programs achieve their potential, its future should be very bright.
