Could the Fall Booster Market Boost Vaccine Stocks?

Vaccine stocks haven’t been the brightest of stars this year. The names that once soared in the triple — and even quadruple — digits have actually declined. I’m talking about biotech players Moderna (MRNA -1.57%), BioNTech (BNTX -1.01%)and Novavax (NVAX -1.08%).

Investors worry that the best revenue days for these companies are over, and many have turned to other investment themes. But investors’ fears may be unfounded. Great days may be ahead for vaccine makers, and soon. Could the fall booster market offer these stocks a boost? Let’s find out.

Solid numbers compared to far

First, a quick look at why people are worried about vaccine makers’ revenue. Clearly, they’ve reported solid numbers so far. Novavax just entered the market late last year — and it already predicts revenue of $4 billion to $5 billion this year. BioNTech and partner Pfizer predict $32 billion in vaccine revenue for the same period. And Moderna forecasts $21 billion in 2022 revenue.

This is positive. But the concerns are about what happens next. In the US, for example, 67% of the population is currently fully vaccinated. Coronavirus cases also declined in the spring. That trend doesn’t usually spur people to get vaccinated. So, investors wonder how vaccine makers can keep revenue climbing well into the future.

We might soon find out. The US Food and Drug Administration (FDA) recently recommended adding omicron components to potential fall booster shots. Moderna and the BioNTech/Pfizer team are on their way to bring such products to market in time for this vaccination season.

They’ve even signed new supply agreements with the US government. Pfizer is supplying 105 million additional doses. This $3.2 billion contract includes updated omicron-specific boosters once they’ve won authorization. And Moderna landed a $1.74 billion deal for the supply of 66 million doses — specifically for its omicron booster candidate. Novavax expects its omicron candidate to be ready in the fourth quarter.

1.7 billion people

So it’s very possible that at least Moderna and BioNTech/Pfizer will benefit from a fall booster market. The big question is whether a large portion of the population will actually go out and get boosters, however. Moderna has said that over the long term, it expects the most at-risk people to opt for annual boosters. The company estimates this population to be 1.7 billion people across the globe.

We could also use the population that gets flu shots as a guide. In the US, that was half of all American adults last year. It’s also important to look at coronavirus trends so far. For the past two years, cases increased over the fall and winter months.

All these elements may result in a solid booster market for these companies to share.

Could all this help lift our struggling vaccine stocks? So far this year, they’ve each posted double-digit declines. (Pfizer’s loss hasn’t been as deep. But Pfizer also didn’t climb as high as the biotech vaccine makers during the earlier days of the health crisis.)

RNA data by YCharts

Declines have left the earliest vaccine players trading at low levels in relation to trailing-12-month earnings.

Chart showing steep drop in the PE ratios of Moderna, BioNTech, and Pfizer since late 2021.

RNA PE Ratio data by YCharts

What may happen

It’s true that demand for boosters probably won’t be as high as demand for the primary series during the worst points of the pandemic. But that doesn’t mean revenue is over. Annually, companies may start to show an increase in orders ahead of fall vaccination seasons.

This momentum could offer vaccine stocks a lift, even as soon as this year. But I wouldn’t expect the enormous gains we saw from vaccine stocks earlier in the pandemic. Investors are no longer piling into these shares. And they may take their time before deciding to invest. They might want to see whether companies win more orders — and whether people actually go out for boosters.

But, over time, the booster market could be a key driver of revenue and share performance. That’s great news for investors who choose to hold on for the long haul.

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