Stocks soared yesterday after President-elect Joe Biden’s victory in the U.S. presidential election and news from Pfizer (PFE) and BioNTech (BNTX) reporting promising data on their leading COVID-19 vaccine. Shares of PFE finished the day up 7.7%. Shares of BNTX were up 13.9%.
The news led to strong moves in stocks of companies that have been hampered by the pandemic, including cruise lines, hotels, and airlines. But it also had the opposite effect on companies that have benefited from widespread social distancing policies, including work from home stocks and streaming services.
PFE and BNTX were two big winners from the day, but two other stocks that may still have room to grow, were down considerably today, Quidel (QDEL) and Zoom (ZM). While these stocks took a beating, I believe their losses provide a buying opportunity as both businesses should continue to perform well until the vaccine has been implemented.
Pfizer, Inc. (PFE)
PFE has been one of the leading companies in the race to develop a vaccine for the coronavirus. The company has been working with BNTX over the last several months. It appears their work has paid off, as both companies released a statement indicating that their vaccine candidate was more than 90% effective in preventing COVID-19 in participants with no evidence of previous coronavirus infection.
The study enrolled 43,538 participants, with 42% having diverse backgrounds. The analysis evaluated 94 confirmed Covid-19 infections among the trial’s 43,538 participants. The results mean that protection from the virus is achieved 28 days after the initial vaccination, which consists of a two-dose schedule. Plus, there were no serious safety concerns observed in the study.
PFE and BNTX previously signed a $1.95 billion contract with the U.S. for 100 million doses and have worked to partner with the European Union, United Kingdom, Canada, and Japan. The companies plan to deliver 50 million doses by the end of 2020. While the COVID vaccine is at the forefront, growth in its other key brands like Ibrance and Eliquis should drive future revenue.
PFE is rated a “Buy” in our POWR Ratings system. It holds a grade of “A” for Trade Grade and Peer Grade, and a “B” for Buy & Hold Grade and Industry Rank. The stock is also ranked #7 in the Medical – Pharmaceuticals Industry.
BNTX was founded in 2008 as an immunotherapy company working on therapies for cancer and other critical diseases. Its focus is on messenger ribonucleic acid (mRNA) vaccine development. Messenger RNA transmits instructions to the body to produce proteins against a disease. The company went public last fall and is up 430% since.
Virtually unknown before working with PFE on the COVID vaccine, the company also has 11 candidates in 12 clinical trials for different immunotherapies. Most of its candidates are in preclinical testing or phase 1 trials and treat conditions such as tumors, head and neck cancer, ovarian cancer, pancreatic cancer, and melanoma.
BNTX and PFE plan to submit the vaccine for Emergency Use Authorization to the U.S. Food and Drug Administration (FDA) once the required safety milestone is achieved, which is expected to occur in the third week of this month. The company plans to continue its final analysis of 164 confirmed cases to collect further data.
Its COVID vaccine will be the primary revenue driver for the foreseeable future. If it’s approved, BNTX will generate more than $1 billion of revenue for every 100 million doses of the vaccine it sells with PFE. Keep an eye on the stock tomorrow as it is expected to report earnings before the bell.
Quidel Corporation (QDEL)
QDEL is engaged in the development, manufacturing, and marketing of rapid diagnostic testing solutions. The company has been benefiting from the pandemic as it manufactures diagnostics healthcare products that have been used to test for the virus. But in terms of price performance, QDEL is definitely a loser today as the stock is down 28.2%.
It appears investors see the positive vaccine data as a negative for QDEL. The reasoning being, if people get vaccinated, there won’t be the need for testing. But I can’t entirely agree with that thesis. At the very earliest, the vaccine won’t be available on a large scale until mid-next year, and with cases currently surging, we need testing more now than ever.
QDEL was the first company to get approval from the U.S. Food and Drug Administration (FDA) for a rapid 15-minute coronavirus test. The company has a goal of producing 220 million tests per year by July of 2021. Due to the high demand for its coronavirus tests, its quarterly revenue grew 276% year over year. Plus, most people forget that the company was consistently profitable way before the pandemic.
QDEL is rated a “Buy” in our POWR Ratings system with a grade of “A” for Trade Grade and a “B” for Buy & Hold Grade, Peer Grade, and Industry Rank. The stock is ranked #10 in the Medical – Diagnostics/Research industry.
Zoom Video Communications, Inc. (ZM)
Another stock that was absolutely hammered today was ZM, which was down 17.4%. Similar to QDEL, I see this as an overreaction by the market. I don’t see any less demand for Zoom over the next few months to a year, with cases soaring. In addition, the work from home trend appears here to stay even after the pandemic.
The company’s expanding presence overseas should be a strong growth catalyst. ZM should also see an expanding customer base from its “Zoom for Home” solution, allowing anyone to deploy a dedicated personal collaboration device for video meetings, phone calls, and interactive whiteboarding.
ZM has seen strong earnings and revenue growth, strong free cash flow, and a net profit margin of 17.1%, making it a stock worthy of its high valuation. I see this potentially one day hiccup as a buying opportunity for investors.
The stock is rated a “Buy” in our POWR ratings system, with a grade of “B” for Trade Grade and Peer Grade. ZM is also ranked #5 out of 54 stocks in the Technology – Services industry.
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About the Author: David Cohne
David Cohne has 20 years of experience as an investment analyst and writer. He is the Chief Value Strategist for StockNews.com and the editor of POWR Value newsletter. Prior to StockNews, David spent eleven years as a consultant providing outsourced investment research and content to financial services companies, hedge funds, and online publications. David enjoys researching and writing about stocks and the markets. He takes a fundamental quantitative approach in evaluating stocks for readers. More…
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