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A Battle Between Two Vaccine Makers

Stock MarketsOct 10, 2021 01:00PM ET
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© Reuters. A Battle Between Two Vaccine Makers

Pfizer (NYSE:PFE) and Moderna (NASDAQ:NASDAQ:MRNA) are two of the bioscience companies that are facilitating global vaccines. I'm bullish on Pfizer but bearish on Moderna.

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Using TipRanks' Stock Comparison tool, we can compare the two vaccine stocks.

Pfizer

Pfizer was already producing stellar financial results prior to COVID-19; in 2019, operating income grew by 13.29%, with the company's wide range of approved drugs contributing to growth.

In 2020, Pfizer spent a lot of capital on Research & Development for the COVID-19 vaccine, which meant that operating income didn't improve all that much in 2020 (+20.89%), even after the vaccine rollout started.

However, in 2021, Pfizer's income statement took off, as operating income has risen by 159.42% year-over-year.

Research & Development costs are predicted to flatline for now, while the company's topline revenue is anticipated to grow even further, as booster shots are likely to be consolidated.

Pfizer is in a good spot from a value perspective: the stock's PEG ratio (0.26) is trading well below the overvalued benchmark (1.00), and its PE ratio is trading below its 5-year average by 1.45%.

Furthermore, Pfizer offers an attractive dividend, with a yield of 3.64% and 11 consecutive years of growth. The cash payout ratio is at a 32.42% discount to its 5-year average, which means that there's plenty of room left for dividend increases in the future.

Wall Street thinks Pfizer stock is a Hold, with an average Pfizer price target of $45.55, implying upside of 7.30%. There have been 2 Buy ratings on the stock, 9 Hold ratings, and no Sell ratings.

Moderna

Moderna wasn't well-known to most before its discovery of the initial COVID-19 vaccine. In the years prior to the vaccine rollout, Moderna was burning through capital and sustaining heavy operating losses; in 2019 the company had operating losses of 940%.  

In 2020, the operating losses narrowed to -36%, but over the past year an operating profit of 54.39% was achieved as it rolled out its vaccines.

Moderna's financial statements could continue to benefit from booster shots, but its reliance on the COVID vaccine alone ensures that the stock is in overvalued territory.

Moderna isn't profitable unless it converts its financial statements to U.S. accounting standards, where it has a PE ratio of 33.37, which is twice as high as Pfizer's. Furthermore, the company's trading at a price to sales ratio that is 129.51% higher than the sector average; this is underappreciated considering the large spike in vaccine sales.

Lastly, unlike Pfizer, Moderna doesn't pay a dividend. Investors are likely to seek dividends going into Q-4 and Q-1 in 2022, as the market could face a drawdown. Moderna's not capable of paying a dividend because it won't be able to sustain its net income without regular mass vaccine rollouts.

Wall Street thinks Moderna is a Hold, with an average Moderna price target of $363.13, implying upside of 19.09%. There have been 3 Buy ratings on the stock, 7 Hold ratings, and 2 Sell ratings.

Final Word

Pfizer could still be worth buying, because of the company's solid history and its dividend capacity. Moderna was a sporadic beneficiary of the vaccine rollout, but I anticipate the overvalued stock to draw down, even given the possibility of regular booster shots.

Disclosure: At the time of publication, Steve Gray Booyens did not have a position in any of the securities mentioned in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates, and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices or performance.

A Battle Between Two Vaccine Makers
 

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John Laurens
John Laurens Oct 10, 2021 6:45PM ET
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All about the money and the payola to the fascist dems in the US.. Pretty soon they're gonna push vaccines on babies.. lol
 
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