In this article, we discuss the 5 stocks to buy before the next pandemic. If you wish to read our comprehensive review of the biotech firms well-positioned to fight the next pandemic, go directly to 10 Stocks to Buy Before the Next Pandemic.
5. Moderna, Inc. (NASDAQ:MRNA)
Number of Hedge Fund Holders: 41
Moderna, Inc. (NASDAQ:MRNA) develops messenger RNA-based vaccines and therapies to treat infectious, cardiovascular, auto-immune and immuno-oncology diseases. It developed the SpikeVax Covid-19 vaccine, which is approved for usage by all major government regulators around the world. Moderna, Inc. (NASDAQ:MRNA) currently boasts 31 vaccine candidates in its drug pipeline, with 19 in clinical trials.
In late April, Moderna, Inc. (NASDAQ:MRNA) announced plans to build a state-of-the-art mRNA vaccine manufacturing facility in Quebec, Canada, as part of a long-term strategic partnership with the Government of Canada to enhance pandemic preparedness. Piper Sandler analyst Edward Tenthoff on May 17 maintained an ‘Overweight’ rating on Moderna, Inc. (NASDAQ:MRNA) shares, and lowered the price target to $214 from $348 based on “pipeline adjustments reflecting current market conditions.”
For the quarter ending March, Moderna, Inc. (NASDAQ:MRNA) posted EPS of $8.58, exceeding estimates by $2.96. Revenue of $6.07 billion signaled growth of 213.16% from the year-ago quarter, and also beat forecasts by $1.64 billion.
41 hedge funds held stakes in Moderna, Inc. (NASDAQ:MRNA) at the close of the first quarter, down from 43 hedge funds a quarter earlier. The total value of Q1 hedge fund holdings stood at $3.79 billion.
Baillie Gifford, an investment firm, talked Moderna, Inc. (NASDAQ:MRNA) in its Q2 2021 investor letter. Here’s what the fund said:
“Among the top contributors to Fund performance in the second quarter was Moderna. Moderna, Inc. (NASDAQ:MRNA) has just reported its first profitable quarter in the company’s history – net income for the most recent quarter was $1.2 billion. It reported revenue of $1.9 billion, an impressive increase compared to $8 million a year ago, driven by the sales of its Covid-19 vaccine. Moderna, Inc. (NASDAQ:MRNA) is expecting to deliver up to 1 billion vaccine doses in 2021 and is in discussions to increase global supply to governments around the world. Our long-term focus remains on the transformational potential of Moderna’s technology and its ability to address different diseases.”
4. AstraZeneca PLC (NASDAQ:AZN)
Number of Hedge Fund Holders: 45
AstraZeneca PLC (NASDAQ: AZN) is a biopharmaceutical firm based in the United Kingdom, which deals in the development of drug therapies and vaccines for a multitude of diseases. It also developed the AstraZeneca vaccine for Covid-19, and a vibrant drug pipeline makes the firm well-positioned in the event of another pandemic. The company also offers a solid 3.75% yield as of June 7, and boasts a decades-long history of offering shareholders dividend payments.
On May 24, Danske Bank analyst Caroline Baner initiated coverage of AstraZeneca PLC (NASDAQ: AZN) with a ‘Buy’ rating and 13,100 GBp price target. The analyst notes that the firm’s medicines in oncology, rare diseases and collaboration projects offer potentially significant sources of revenue and boast exclusivity in the United States till 2030. She also sees “durable” growth drivers and visibility through 2030.
AstraZeneca PLC (NASDAQ: AZN) posted $11.39 billion in revenue for the first quarter of 2022, representing a jump of 55.60% in comparison to the same period over last year, and beating analysts’ forecasts by $423.24 million. As of June 7, AstraZeneca PLC (NASDAQ: AZN) shares have recorded a jump of 12.62% in the last 12 months.
Investors were seen loading up on AstraZeneca PLC (NASDAQ: AZN) shares at the end of the first quarter, where 45 hedge funds were long on the company shares, in contrast to 42 hedge funds a quarter earlier. Fisher Asset Management was the most prominent shareholder of AstraZeneca PLC (NASDAQ: AZN) in the first quarter, with 20.84 million shares valued at $1.38 billion.
3. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 79
Pfizer Inc. (NYSE:PFE) is a biopharmaceutical firm based in New York, and is behind the popular Comirnaty Pfizer-BioNtech Covid-19 vaccine used all around the world. Sales of the vaccine generated $36 billion in revenue during 2021, and in March the US Food & Drug Administration Authority (FDA) approved the second booster dose of Pfizer’s Covid vaccine.
In early June, The Wall Street Journal reported that Pfizer Inc.’s (NYSE:PFE) COVID-19 pill, Paxlovid, has become the leading Covid pill in the United States, as improved supplies ensured widespread availability. Trials have showed that Pfizer’s pill is 88% effective at preventing hospitalization, as compared to the 30% efficacy rate by the rival Molnupiravir drug from Merck (NYSE:MRK) and Ridgeback Biotherapeutics. On May 4, Wells Fargo analyst Mohit Bansal maintained an ‘Overweight’ rating on Pfizer Inc. (NYSE:PFE) shares and revised the price target to $55 from $60.
Pfizer Inc. (NYSE:PFE) posted earnings per share of $1.62 for the first quarter, beating estimates by $0.05. The revenue of $25.66 billion for the quarter also outperformed estimates by $927.1 million, and grew 76% in comparison to the year-ago quarter.
As of the end of the first quarter, 79 hedge funds owned positions in Pfizer Inc. (NYSE:PFE) shares, with a combined value of $4.1 billion. This is in contrast to 83 hedge funds a quarter ago. With 10.7 million shares priced at $554.1 million, AQR Capital Management was the top shareholder of Pfizer Inc. (NYSE:PFE) in the first quarter of 2022.
ClearBridge Investments, an asset management firm, talked about the prospects of Pfizer Inc. (NYSE:PFE) in its Q4 2021 investor letter. Here’s what the fund said:
“While the level of general turnover abated as we progressed through 2021, it remained high in one area: post-COVID-19 recovery plays. The concept behind this investment thesis was, and still is, straightforward: with the advent of effective vaccines, the path from pandemic to endemic is just a matter of time. As this transition occurs, the estimated excess savings of over $2 trillion built up on U.S. consumer balance sheets will unlock dramatic pent-up demand for experiences, especially global travel. This investment case seemed especially compelling when the Pfizer vaccine positively surprised markets in November 2020. As a result, we made post-COVID-19 stocks (which were trading well below our estimate of recovery value) a sizable theme within the portfolio. We understood this to be a more aggressive tilt in positioning because it required a major improvement in demand to catalyze fundamentals and drive price toward higher business values. While we accepted that recovery would not be smooth and that it would take time to deploy vaccines both domestically and globally, we decided that recovery was the logical path of least resistance and we were being well compensated for these risks.
What we did not account for, however, was vaccine hesitancy and the risk of further infection waves. As a result, the first variant wave, Delta, was a negative surprise to both the market and our team. When the risk surfaced, we immediately updated our probability-driven models and debated how we should react. The resulting conclusion was that the recovery would be delayed and that we should reduce our exposure quickly, subsequently targeting the most aggressive recovery stocks such as cruise lines. We again acted swiftly and decisively to the positive surprise that Pfizer had delivered a high-efficacy antiviral COVID-19 pill. This pill should greatly reduce COVID-19 severity risks globally, increasing the probability of a global travel recovery in 2022. While this is still true, the emergence of the highly mutated Omicron variant set off another infection wave which spurred us to again act quickly and further reduce our risk exposure. This back-and-forth may sound exhausting, but it highlights our compulsion to act if we determine a surprise has a large enough impact on the probabilities that power our valuation-driven investment cases.
2. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 83
Johnson & Johnson (NYSE:JNJ) is one of the most renowned manufacturers of biopharmaceutical products. It also offers consumer products, and medical devices. Its Janssen pharmaceutical unit developed the JnJ/Janssen single-dose vaccine for Covid-19, which showed an efficacy rate of 66.3% during clinical trials to prevent lab-confirmed Covid-19. As a giant in the industry, Johnson & Johnson (NYSE:JNJ) has posted dividend increases for 59 years in a row, and its yield stands at 2.56% as of June 7.
On May 23, SVB Leerink analyst David Risinger gave Johnson & Johnson (NYSE:JNJ) an ‘Outperform’ rating and a $200 price target. He holds that the company should outperform given its ability to execute value-adding mergers and acquisitions, and post consistent earnings growth.
83 hedge funds reported bullish bets on Johnson & Johnson (NYSE:JNJ) shares at the end of the first quarter, with combined positions worth $7.4 billion. The same number of hedge funds were stakeholders in the company a quarter ago as well. With 6.65 million shares valued at $1.17 billion, Arrowstreet Capital was the biggest shareholder of Johnson & Johnson (NYSE:JNJ) in the first quarter of 2022.
Johnson & Johnson (NYSE:JNJ), for the first quarter, reported an EPS of $2.67, beating estimates by $0.10. However, the quarterly revenue of $23.4 billion fell short of analysts’ expectations by nearly $192 million.
Distillate Capital, an investment firm, mentioned Johnson & Johnson (NYSE:JNJ) in its Q2 2021 investor letter. Here is what the fund said:
“The largest additions in the rebalance, Johnson & Johnson was around 50 and 40 basis points incrementally. J&J underperformed in the quarter while its normalized free cash flows held steady and so its position size was topped off to match the stable cash flows.”
1. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 84
PE Ratio: 16.77
With a market cap of $227.19 billion, Merck & Co., Inc. (NYSE:MRK) stands as one of the most prominent biopharmaceutical firms in the world. It researches and develops drug therapies for a range of disorders such as cardiovascular,, immunology, neuroscience and cancer diseases, as well as vaccines for babies, adolescents, and adults. The company also develops veterinary pharmaceuticals and vaccines through its Animal Health segment. Merck & Co., Inc. (NYSE:MRK) has paid a dividend to shareholders since 1989, and its current yield stands at 3.07% as of June 6.
On April 12, Barclays analyst Carter Gould maintained an ‘Overweight’ rating on Merck & Co., Inc. (NYSE:MRK) shares, and increased the price target to $97 from $94. In the last 12 months, the company shares have registered a jump of 23.41%, and 16.87% in the year to date as of June 6.
Investors were recently seen buying Merck & Co., Inc. (NYSE:MRK) shares. At the close of the first quarter, 84 hedge funds were bullish on the company shares, as compared to 80 hedge funds in the previous quarter. The combined worth of Q1 hedge fund holdings stood at $5.86 billion. Fisher Asset Management owned a $970.8 million position in Merck & Co., Inc. (NYSE:MRK) at the end of the first quarter, making it the biopharmaceutical company’s largest shareholder.
For Q1 2022, Merck & Co., Inc. (NYSE:MRK) reported earnings per share of $2.14, outperforming estimates by $0.31. The company’s revenue for the quarter came in at $15.9 billion, beating analysts’ estimates by $1.25 billion and showing year-on-year growth of 31.63%.
Asset management firm Miller Howard Investments mentioned Merck & Co., Inc. (NYSE:MRK) in its Q3 2021 investor letter. The fund said:
“While optimistic about a recovery, we continue to balance our cyclical holdings with dividend-payers in stable, less economically-sensitive industries. We hold three pharmaceutical companies, (which includes) Merck (MRK). All three have strong cash flows and balance sheets, making their high dividends reasonably safe. The investment controversy surrounding these pharma companies is whether they can develop or acquire new products to replace their current blockbuster drugs. The low valuations on these stocks reflects what we believe to be undue pessimism by investors on the prospects for new drugs.”
You can also take a look at 10 Best Software Stocks To Buy Now and Top 10 Places to Go as Soon as Coronavirus Pandemic Ends.
