It goes without saying that the early movers of the Covid-19 vaccine race have been the best positioned to benefit in terms of revenue and cash flows. Vaccine stocks like Moderna (NASDAQ:MRNA) have already delivered multifold returns to investors.
However, with factors like Covid-19 variants and the possibility of booster doses, new entrants in the race could still make an impact. Further, the percentage of people vaccinated in low-income countries remains significantly low. Even for a country like India, the percentage of the population with at least one dose is only about 12% today.
Currently, the World Health Organization indicates that 102 vaccines are still in clinical development. Furthermore, 185 candidates are in the pre-clinical stage. Of course, only a small percentage of these candidates will make it to market. But there is still plenty of opportunity for some of these names to succeed.
That all said, let’s talk about seven Covid-19 vaccine stocks that seem to have a promising future.
- Curevac (NASDAQ:CVAC)
- Valneva (NASDAQ:VALN)
- Ocugen (NASDAQ:OCGN)
- Sanofi (NASDAQ:SNY)
- Arcturus Therapeutics (NASDAQ:ARCT)
- Novavax (NASDAQ:NVAX)
- Dr. Reddy’s Laboratories (NYSE:RDY)
Best Vaccine Stocks to Buy: Curevac (CVAC)
With Curevac likely to join the list of approved vaccines in the coming quarters, CVAC stock has been steady.
For starters, this company’s vaccine candidate has passed the first interim analysis in its Phase 2b/3 study. A final submission to the European Medicines Agency (EMA) seems to be around the corner. Back in March, Curevac also announced a manufacturing agreement with Celonic for 100 million doses of the vaccine. Of this, over “50 million doses are expected to be produced before the end of 2021.”
Another reason to like CVAC stock is the fact that the company has already initiated pre-clinical trials for a “second generation Covid-19 vaccine.” The study is in collaboration with GlaxoSmithKline (NYSE:GSK). In its pre-clinical studies, the second vaccine candidate has demonstrated “high immunogenicity against virus variants.”
From a financial perspective, Curevac reported 1.32 billion euros ($1.6 billion) in cash and equivalents as of fiscal 2020. This provides the company with ample financial flexibility to fund its trials and potential manufacturing expansion.
VALN stock was listed on the Nasdaq last month. This stock is still flying under the radar, but it’s an attractive Covid-19 vaccine play.
Basically, Valneva is developing one of the only inactivated Covid-19 vaccines in Europe. Subject to regulatory approvals, the company will commence vaccine deliveries later this year.
Valneva has already signed a deal with the U.K. government to supply 190 million doses of the vaccine through fiscal 2025 (Page 21). The deal is worth 1.4 billion euros ($1.69 billion). Once deliveries commence, the company’s revenue and cash flow are likely to see significant upside.
This company is also engaged in “bilateral” negotiations with other countries for vaccine orders. Additionally, Valneva has been scouting for partners for delivery of its vaccines outside Europe. Therefore, there seems to be several positive triggers in store here.
Recently, Valneva also announced that it will participate in the “world’s first Covid-19 vaccine booster trial” in the United Kingdom. Booster doses potentially imply recurring revenue from the vaccine. Plus, on top of its Covid-19 candidate, VALN is even in advanced-stage trials for its Chikungunya and Lyme disease vaccines. These are other potential stock upside triggers.
Considering the possibility of strong top-line growth and further vaccine orders here, I believe VALN stock is among the top vaccine stocks to consider.
Best Vaccine Stocks to Buy: Ocugen (OCGN)
OCGN stock is more of a speculative play among Covid-19 vaccine stocks. Yet, even after upside of over 4000% in the last one year, some exposure to the stock can still be considered.
As an overview, Ocugen has partnered with Bharat Biotech to manufacture and market a vaccine called Covaxin in the United States. The inactivated Covid-19 vaccine has proven to be effective against India’s variant of the virus (which the World Health Organization also termed as a “global concern”). In fact, it has proven to be 100% effective in preventing severe Covid-19 cases.
Recently, Ocugen confirmed that it’s also on track to submit an emergency use authorization application to the U.S. Food and Drug Administration (FDA). The potential approval of its vaccine could send OCGN stock higher. At the same time, the U.S. has been vaccinating citizens at an aggressive pace. If approval comes after a few more months, there might be limited scope for revenue upside.
Lastly, though, it’s also worth noting that Ocugen is targeting the 12-plus age group for Covaxin. If FDA approval comes sooner rather than later — and is for a wider age group — the stock upside could be more significant here. Therefore, the outlook for OCGN stock hinges on several different scenarios.
SNY stock also looks attractive among the vaccine stocks, with a forward price-to-earnings (P/E) ratio of 9.15. In addition to its attractive valuations, the stock also offers a dividend yield of 3.72%.
Last week, Sanofi and partner GlaxoSmithKline announced initiation of a global Phase 3 clinical efficacy study for its Covid-19 vaccine. The differentiating factor is a two-stage design that will evaluate “original D.614 virus as well as B.1.351 variant.” Sanofi expects regulatory approval by Q4 2021. However, manufacturing is expected to commence in the next few weeks.
Earlier in May 2021, Sanofi and GSK also released Phase 2 efficacy data. The “interim results showed 95% to 100% seroconversion following a second injection.” Further, the vaccine had “acceptable tolerability and […] no safety concerns.”
Another important point to note here is that the company is also focused on a vaccine that addresses the needs of a post-pandemic setting. In other words, the company will also likely focus on booster doses. Of course, with new variants, there is a potential to make inroads in the market.
Overall, the booster-dose market outlook seems promising for Sanofi and its partner. Plus, there are still significant vaccine shortages in countries around the world. These could be potential growth markets as the vaccine becomes approved.
Best Vaccine Stocks to Buy: Arcturus Therapeutics (ARCT)
After skyrocketing to a high of around $129 in December 2020, ARCT stock currently trades at about $30. I believe that current levels are attractive for exposure to this stock.
As an overview, Arcturus Therapeutics is developing a self-amplifying mRNA and “LUNAR” Covid-19 vaccine. The vaccine is currently in Phase 2 of trials but “data supports advancement into Phase 3.”
It’s worth noting that Arcturus seems to be behind in the Covid-19 vaccine race. However, the company already has a deal with Israel and Singapore. As a matter of fact, Singapore will get the “first claim to any successful Arcturus vaccine.”
Therefore, if late-stage trials deliver positive results, the company is positioned for growth in fiscal 2022. Plus, one advantage of the company’s mRNA vaccine is that its readily updatable as new variants arise. Another advantage is that the company has a single-shot vaccine with a relatively easy logistics solution; the vaccine can be freeze-dried and does not require an ultra-low storage temperature (Page 14).
So, with countries like India facing many logistical challenges, there is ample scope for ARCT to get new orders upon approval of its potential vaccine.
NVAX stock is another interesting name among the vaccine stocks. Novavax might seem to be a laggard in the vaccine race. However, it might be too early to assume that the company will be unable to make significant inroads once its Covid-19 vaccine is approved.
In May 2021, Novavax announced that it will be participating in the mix-and-match Covid-19 vaccine booster trials in the United Kingdom. If there is success on this front, it will likely open up a considerable market for Novavax.
Last month, NVAX also announced positive pre-clinical trial data for its combination influenza and Covid-19 vaccine candidate. This could be another potential game changer for the company, especially as an annual influenza dose in tandem with a Covid-19 dose would deliver recurring revenue.
On top of this, Novavax’s CEO has indicated that the company will likely “prioritize COVID-19 vaccine deliveries to low-income countries.” These countries represent a big addressable market. Novavax currently plans for production of 150 million monthly doses of its vaccine by Q4 2021.
From a price perspective, NVAX stock touched a high of $331.68 in the beginning of February. After a deep correction, though, the stock currently trades at around $172. I believe that this is a good accumulation opportunity, considering the developments discussed.
Best Vaccine Stocks to Buy: Dr. Reddy’s Laboratories (RDY)
Reddy’s Laboratories is not directly involved in clinical trials for any Covid-19 vaccine. However, the Indian generic drug maker is a partner for Russia’s Sputnik V vaccine. Currently, a total of 250 million doses of the Sputnik V vaccine are expected in India. However, only 15% to 20% of that total will be imported. The remaining doses will be manufactured by Reddy’s Laboratories.
On top of this, RDY is also in talks to bring the Sputnik Light Covid-19 vaccine to the country. A possible agreement for the single dose vaccine could potentially be another revenue upside trigger.
But there’s another important development that could affect how RDY stock does: India recently scrapped local trials for Covid-19 vaccines. This will allow faster clearance of the Pfizer (NYSE:PFE) and Moderna vaccines in India. That means Reddy’s could be positioned for multiple vaccine partnerships soon.
It’s worth noting that RDY stock has been trading largely sideways in the current year. Given these developments, though, a breakout on the upside seems likely.
On the date of publication, Faisal Humayun did not have (either directly or indirectly) any positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modelling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.
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