Will COVID-19 be finished in 2022? That would be nice. If the vaccines work and we develop "herd immunity," COVID will certainly recede in importance. It will be more like the flu, and many of us will get vaccinated every year to stay safe. So how should investors play this transition?
Three Fool.com contributors have three different approaches for the new year. Here's why they like Pfizer (PFE -0.12%), Novavax (NVAX), and Live Nation Entertainment (LYV -2.37%) in 2022 and beyond.
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A dominant force in the COVID-19 arena
George Budwell (Pfizer): Pfizer's stock has rocketed higher this year by a whopping 35%. The drugmaker's meteoric rise in 2021 is largely due to its BioNTech-partnered COVID-19 vaccine known as Comirnaty. In the third quarter alone, this vaccine raked in over $13 billion in sales. Comirnaty is on pace to become the best-selling vaccine of all time.
What's more, this novel coronavirus vaccine has quickly become the market leader by a wide margin in both the U.S. and the EU, according to the company's third-quarter conference call. The bad news for shareholders, though, is that Comirnaty's sales are likely to drop by a few billion next year.
Pfizer may already have a viable solution to this problem, however. On Tuesday, the pharma giant announced that it had applied for emergency use authorization from the Food and Drug Administration (FDA) for the oral COVID-19 pill Paxlovid. In a large, randomized trial, Paxlovid slashed the risk of hospitalization and/or death among patients at risk of severe disease by 89% when taken within three days of the onset of symptoms. Pfizer's oral coronavirus pill, thus, appears destined to be a big seller.
What's an oral COVID-19 pill worth? While the company has yet to release any definitive pricing info, Wall Street thinks this pill ought to generate at least $15 billion in sales next year. This amount should easily offset the anticipated slowdown in Comirnaty sales next year. As a result, Pfizer's stock seems poised for another banner year in 2022.
Novavax is leading the race for a COVID/Flu combo vaccine
Taylor Carmichael (Novavax): In the short term, I'm expecting Novavax stock to spike higher when the company receives authorizations around the world for its COVID-19 vaccine. The stock market has already assumed a lot of success, based on the biotech's fantastic phase 3 data. All that clinical success is why the stock shot up from a micro-cap to a $14 billion company in two years.
Data source: YCharts.
While there might be some profit-taking along the way, Novavax stock promises to be an outstanding long-term hold. The biotech has two major vaccines ready to hit the market. The company's flu vaccine, Nano-Flu, defeated the market-leading flu vaccine from Sanofi in a head-to-head phase 3 trial last year. And its COVID vaccine has already started getting authorizations in Indonesia and the Philippines.
The flu is a $6 billion annual market around the world. And COVID vaccines are projected to hit $25 billion in annual revenue by 2024. So what's really exciting for Novavax investors? The biotech is the first drug company to get a COVID/flu combo vaccine into clinical trials. Back in September, Novavax initiated its phase 1/phase 2 trial in 640 adults. No other drug company has a combo vaccine in clinical trials yet. While Novavax stock has had a huge run over the last couple of years, there is still plenty of upside in 2022 and beyond.
And the beat goes on
Patrick Bafuma (Live Nation Entertainment): With COVID-19 boosters on the scene, I hear a lady singing that the end of the pandemic is near. And with that, Live Nation Entertainment is seeing its business brought back to life. In fact, this past June was the brand's Ticketmaster North America fourth-best month in history for ticket volume.
And this past quarter, Ticketmaster had its highest operating income ever. It is clear that fans and artists alike are excited to get back together in the flesh. That means both public health departments and the general public are feeling safe to have crowds gathering again. That equals big wins for Live Nation.
In the third quarter of 2021, the $25 billion iconic entertainment company boasted over $1.9 billion in event-related deferred revenue, up from $952 million in the same quarter in 2019. Business is expected to remain strong, as Live Nation reported that even though ticket prices were about 10% higher, venues still sold out in record time. Plus, attendees delivered a 20% increase in on-site spending compared to 2019 for the event-centric company.
It gets even better, as Live Nation learned a few new tricks during the pandemic, too. It is taking on new initiatives ranging from streaming concerts to non-fungible tokens (NFT) and artist merchandise. Its first foray into NFTs will be related to house-music legend Swedish House Mafia's first tour in 10 years. Fans will be able to view, share, gift, trade, and resell their NFTs on the Live Nation website, creating yet another earnings stream for the entertainment company.
With entertainment roaring back and Live Nation armed with multiple new revenue streams, a return to normalcy by way of live in-person entertainment is my go-to COVID play in 2022.
