Better Bull Market Buy: Pfizer vs. Moderna
COVID-19 has been especially rough for Pfizer (NYSE: PFE) and Moderna (NASDAQ: MRNA) investors over the last couple of years. Shares of both drugmakers have plunged as the demand for their respective COVID-19 vaccine declined significantly.
Problems often present opportunities, though. Pfizer and Moderna just might be rebound candidates in 2024. But which of these two stocks is the better bull market buy? Two Fool.com contributors weigh in on how Pfizer and Moderna stack up against each other.
The case for Pfizer
Adria Cimino (Pfizer): Pfizer's revenue soared to a record high of more than $100 billion in 2022 thanks to its coronavirus products. But today, the company's coronavirus vaccine, Comirnaty, and treatment, Paxlovid, actually are hurting revenue growth. That's because demand for these products has waned significantly in these later stages of the pandemic.
At the same time, some of Pfizer's other best-selling drugs are facing losses of exclusivity this decade. All of this may sound pretty grim, but there's one big reason to buy Pfizer stock in spite of these challenges: new products. The company is completing its biggest phase of product launches ever, with 19 new products or indications entering the market over an 18-month period.
Pfizer predicts these products will generate $20 billion in revenue in 2030, more than compensating for the $17 billion in lost product revenue due to patent expirations of older blockbusters. On top of this, Pfizer also is set to add to revenue thanks to a string of acquisitions in recent times. The latest is oncology specialist Seagen, which Pfizer says should contribute more than $3 billion to revenue this year.
And, importantly, the acquisition boosts Pfizer's position in oncology with expertise in antibody-drug conjugates (ADC) -- or products that use the power of antibodies to target tumors with drugs designed to destroy them. ADCs may be on the road to replacing chemotherapy in the treatment of some tumor types, so strength here could represent a significant key to growth.
Of course, Pfizer's growth won't take off overnight. The company expects coronavirus product revenue of $8 billion this year, a dramatic drop from $55 billion back in 2022. And sales of older blockbusters will hurt revenue before newer products fully compensate. But for patient investors, Pfizer may be worth the wait -- since the company is setting the stage for a new era of growth later this decade and into the next. And considering this, today, trading at only about 12 times forward earnings estimates, Pfizer shares look like a steal.
The case for Moderna
Keith Speights (Moderna): Adria's key points for Pfizer also apply to Moderna. Yes, sales for the company's COVID-19 vaccine Spikevax have plummeted and pulled down Moderna's share price. However, Moderna could be about to begin an important new chapter thanks to the introduction of new products.
In particular, Moderna is only a few months away from a potential U.S. approval of its messenger RNA (mRNA) respiratory syncytial virus (RSV) vaccine. The company has high hopes for its RSV vaccine. Assuming it wins regulatory approval, it will be the only prefilled syringe product on the market at the time of its anticipated launch later this year.
Just how important is this second product to Moderna? The RSV vaccine could enable the company to return to organic sales growth in 2025. Moderna also expects to again reach breakeven in 2026.
And there are more new products potentially on the way as well. Moderna plans to file for approvals of its seasonal flu vaccine mRNA-1010 this year. It should report results from a late-stage study evaluating a combination flu and COVID-19 vaccine in 2024. The company also is on track to announce efficacy data later this year from its pivotal late-stage study of cytomegalovirus (CMV) vaccine candidate mRNA-1647.
Moderna and its big partner, Merck, are expanding late-stage studies of mRNA-4157 in combination with Keytruda in treating melanoma and non-small cell lung cancer. Results released from a phase 2b study showed that this combo could be highly effective in treating melanoma, with a 49% reduction in the risk of recurrence or death.
The bottom line for Moderna is that the worst appears to be over, with seemingly brighter days ahead. With its market cap now at close to $40 billion, investors could soon be attracted yet again to this once high-flying biotech stock.
A split decision?
Wall Street appears to be somewhat split on Pfizer versus Moderna. The average 12-month price targets for Pfizer and Moderna reflect upside potentials of 12% and nearly 25%, respectively. However, 12 of 22 analysts surveyed by LSEG rate Pfizer as a buy or strong buy, compared to only 10 of 24 for Moderna.
Both of these stocks could bounce back with the market in a bullish mood. However, income investors will prefer Pfizer with its juicy dividend yield of nearly 5.9%. Value investors will also likely gravitate toward Pfizer.
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Adria Cimino has no position in any of the stocks mentioned. Keith Speights has positions in Pfizer. The Motley Fool has positions in and recommends Merck and Pfizer. The Motley Fool recommends Moderna. The Motley Fool has a disclosure policy.
Better Bull Market Buy: Pfizer vs. Moderna was originally published by The Motley Fool
