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Companies that stand to benefit from COVID-19 vaccine distribution

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As the mass distribution of the first COVID-19 vaccine developed by Pfizer and BioNTech begins across the U.S., Julie Hyman, Brian Sozzi and Myles Udland discuss what companies stand to benefit as Operation Warp Speed kicks into high gear.

Video Transcript

JULIE HYMAN: Our top story today though. The first Pfizer-BioNTech COVID-19 shots are scheduled to arrive in hospitals across the country today. They could start being administered to health care workers within just a few hours. And that is where we start. And we're looking at the effect on the market, both broadly and on individual stocks and sectors. I'll speak broadly first because we are seeing a little bit of a lift for stocks today.

Even though, as we've seen some of the incremental vaccine developments, it hasn't seemed to benefit the broader market. But maybe just the actual reality on the ground of it. Today, it's actually happening. The shipments are actually going out. But I imagine we'll be seeing some fits and starts as people realize it's not just like flipping a switch and everyone's vaccinated. It's going to take some time.

But certainly, there are a lot of individual groups to watch. Brian Sozzi, I know that you're watching some of the sectors and companies that are helping with all the shipments and the whole process of [INAUDIBLE]

BRIAN SOZZI: Yeah, Julie, I'm not surprised to see shares of UPS and FedEx really trade higher in advance of this development. You have UPS shares up almost 50% year to date. You have FedEx putting in about an 88% year to gain. Part of that, of course, reflects what we're seeing in holiday shopping. But of course, a big part of this-- if you're a UPS shareholder, you're a FedEx shareholder, you saw those shipments leave Pfizer yesterday-- on Sunday, on the weekend-- for the first time ever.

And you have to be excited about what this could mean-- them playing a key role in getting vaccines to people across the globe. What it could mean for their bottom line, not just for this quarter, not just for next quarter, really potentially over the next year and a half and two years. Now on the contrary, you are seeing shares of CVS, Walgreens, those stocks are not doing that well in advance of the vaccine. In large part, because they will be some of the last companies to benefit.

MYLES UDLAND: You know, I think it's interesting. When you think about the companies that we're talking about here, especially the shippers-- your cold chain storage plays, train carrier companies we've had on the program in the last couple of weeks. On the one hand, sure, it's a vaccine play. On the other hand, these are cyclical plays. This is a reopening trade as much as it is anything else.

And we can say, well, the benefits of being involved with that vaccine distribution. Those may accrue to these companies at some level. But ultimately, a company like a PACCAR, like a Cummins, anyone who's making series eight truck engines. They're going to do well if the economy continues to open up and we see robust demand for shipping and trucking and all those things as we get into 2021 and 2022.

So I think you have a dual play here if you want to really be playing the vaccine distribution explicitly. Another thing I would just flag as well, and Sam Ro wrote about this in the Morning Brief this morning in Yahoo Finance. All the risks that investors are concerned about next year are related to something going wrong with the vaccine. The number one risk that respondents to Deutsche Bank's poll had was, the virus mutates and dodges vaccines.

Second risk is serious side effects. Third risk is that people don't want to take it in large enough numbers, such that that 70% herd immunity-- whatever percentage you want to call herd immunity between infection and inoculation. Those are the concerns that investors have. And so even with us only talking about vaccine optimism, there still seems to be upside scenarios for the market if this goes out better than expected. Because I think right now, even though we've had record development on a vaccine, extremely high efficacy numbers in multiple studies, expectations are still low. I think, relative to what you might say.

And I don't know, I was surprised I guess by the findings of that report, that there still might be optimism left-- if that makes sense-- in a year that certainly has surprised to the upside when it comes to investor sentiment.

JULIE HYMAN: Well, as I always say, we'll see. We'll see if all of this goes off without a hitch and if that optimism then materializes that further upside.