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Is the COVID-19 Investing Boom Over?

By Keith Speights and Brian Orelli, PhD – Jan 15, 2022 at 1:04AM

Key Points

  • Many vaccine stocks have fallen recently despite surging COVID-19 cases.
  • Sales from boosters appear to be already priced into the stocks' valuations.
  • The market dynamics could change, though, with upside potential still possible for several COVID-19 stocks.

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Maybe, but some COVID-19 stocks could still move higher.

While COVID-19 cases have been soaring in recent weeks, the stocks of several COVID-19 vaccine makers have dropped. In this Motley Fool Live video recorded on Jan. 5, Motley Fool contributors Keith Speights and Brian Orelli discuss whether or not the COVID-19 investing boom is now over.

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Keith Speights: As I mentioned, Pfizer (PFE -0.37%) and BioNTech (BNTX 0.95%) have had some good news lately. They've received an expanded Emergency Use Authorization from the FDA for boosters in kids ages 12-15 and that happened on Monday. Both of those stocks fell though, and in general, COVID-19 vaccine stocks have been declining in recent weeks.

Brian, the question here as we start the new year 2022, do you think that perhaps the COVID-19 investing boom is now over?

Brian Orelli: Yeah. I mean, I think the boosters for the teens was largely already priced into valuation. I think everybody expected the FDA to give the EUA for the boosters. I don't think the lack of a move isn't that big of a deal.

Bigger picture, I think we could get another pop in valuation, but it's going to take something happening that's a little less certain. I think that if the vaccine makers started booking large orders for 2023 and into 2024, that would give investors a lot of confidence that they're going to be able to continue to sell the vaccines for years to come. I think that could potentially get the valuations of the vaccine makers moving back up.

But other than that, I think if we're going to fizzle out on using vaccines beyond 2022, then I think that that's going to make it hard for them to keep their high valuations as they had last year when everybody thought they were going to sell vaccines forever.

Speights: Yeah, Brian, I cover a lot of these stocks. Many of our viewers know that The Motley Fool tracks any stocks that move significantly, usually 10% or more, either up or down. Some we track if they move 5% or more and have articles about those.

One thing that I've just looked at, you see some of these stocks go down despite good news. My best guess as to what's going on is that investors always look to the future. They're always forward-looking. I think investors are looking past the current increased number of COVID-19 cases due to the omicron variant. I think maybe investors are seeing a better future in the not-too-distant future where the demand for vaccines isn't as high and COVID-19 switches from pandemic to endemic.

In fact, I was just trying to pull it up -- I get a daily email from The New York Times and this email talked about less hospitalization for the omicron variant, even though hospitalization numbers are going up, there are less people needing to be admitted to the hospital as a result of this variant. Milder cases, that does seem to be the case now, and possibly, the data still doesn't match yet, but possibly fewer deaths from the omicron variant.

My guess is that investors are looking at some of these numbers, not just the scary numbers, but looking underneath and seeing that, hey, this situation could get better in the not-too-distant future and that's not a good thing for vaccine stocks.

Orelli: Yeah, and I think the other issue is that omicron is very contagious and so we're also going to get herd immunity. And so that's going to cause it to be not necessarily as big of a deal if a whole bunch of people get infected with omicron and they don't die, then there'll be the antibodies even if they didn't get the vaccine. And so that should help lower the spread of the coronavirus.

Speights: You're exactly right. Personally, I would not go as far as to say that the investing boom for COVID-19 is over just yet. I do think the companies that make tests can really see some increased sales over the next several months.

Who knows what's going to happen next? Look, this is a fluid environment. Things can change dramatically. I would not write off the possibility that some of these stocks could still experience nice upswings due to COVID-19.

Orelli: Yeah. I just think that when you need some bad news [laughs] basically, to get vaccine companies moving in the right direction.

Speights: Sometimes we're talking about bad news, but it's good for the companies. I think people who aren't investors may think you're being cynical or harsh or whatever, but it's just the reality that sometimes bad news is a positive for certain stocks.

Orelli: Yeah. I own Novavax, [laughs] I'm not necessarily rooting for a new wave of a new variant. I'd rather count on its flu vaccine than have to deal with another wave of coronavirus, certainly.

Brian Orelli, PhD owns Novavax. Keith Speights owns Pfizer. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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