Does a rising tide really lift all boats? We could soon find out if the adage applies to the stock market.
A bull market is now well underway. The S&P 500 has soared more than 30% over the last 12 months, but not every stock has benefited from the overall market momentum so far. However, two Motley Fool contributors think they’ve identified magnificent stocks still trading down 30% or more from their 52-week highs to buy right now.
Pfizer: Down 34% over the last 12 months
Adria Cimino (Pfizer): Pfizer (PFE -1.08%) was a stock market star during the height of the pandemic thanks to its coronavirus vaccine and treatment. Those products helped the company reach record-high annual revenue of more than $100 billion.
These days, however, demand has declined and the company’s earnings don’t look nearly as strong. The fact that a few of the blockbuster drugs on its shelves are heading for losses of exclusivity later this decade hasn’t helped matters, either.
But this dark cloud has a silver lining. Pfizer may be transitioning into an exciting new growth phase, thanks to in-house product development and a key acquisition.
Last year was a record year for product approvals at Pfizer. The company won nine approvals for new molecular entities and additional nods to expand indications for already commercialized products. These efforts should bear fruit in the near term and down the road. Pfizer expects new approvals to result in $20 billion in potential revenue by 2030. This should more than compensate for the $17 billion the company expects to lose due to patent expirations of older products.
The other part of Pfizer’s transition is the company’s expanding focus on oncology through its acquisition of Seagen. With Seagen, Pfizer added four approved oncology products. This move gives it a series of near-term catalysts through the first half of next year, including four priority-indication launches, seven expected phase 3 data readouts, and six potential phase 3 study launches.
Pfizer predicts its oncology strategy will produce eight or more potential blockbusters by the end of the decade. So the bet on oncology is a big one and clearly could give Pfizer’s earnings and share price a boost in the coming months and over the long haul.
Pfizer’s stock price has dropped more than 30% over the past year, leaving it trading at 12x forward earnings estimates. Considering the company’s wave of new products and the potential of Seagen — bringing on board commercialized products, as well as research and development expertise — Pfizer stock looks like a bargain at today’s level.
Moderna: Down 35% over the last 12 months
Keith Speights (Moderna): The same COVID-19 headwinds that plagued Pfizer have also negatively impacted Moderna (MRNA 1.29%). Over the last 12 months, share prices of the vaccine maker have plunged close to 30%. However, at long last, I think Moderna is again a magnificent stock to buy.
The U.S. Food and Drug Administration (FDA) set a PDUFA date of May 12, 2024, for its approval decision of Moderna’s respiratory syncytial virus (RSV) vaccine mRNA-1345. I fully expect the FDA will give mRNA-1345 a thumbs-up. I also predict that the U.S. CDC Advisory Committee on Immunization Practices (ACIP) will recommend the RSV vaccine when it meets in late June.
Moderna will face Pfizer and GSK in the RSV market, and both have already won FDA approvals for their respective RSV vaccines, but there should be plenty of room for all three companies to win. However, Moderna could give the two bigger drugmakers a run for their money with its mRNA-1345’s pre-filled syringes, which will save pharmacists and doctors time in administration.
Thanks largely to the anticipated commercial success of mRNA-1345, Moderna projects that it will return to organic sales growth in 2025. The company also expects to break even again in 2026.
The new RSV vaccine probably won’t be Moderna’s only growth driver over the next few years. The company hopes to file for approval of its seasonal flu vaccine, mRNA-1010, later in 2024. It also has several promising late-stage programs, notably including the combination flu/COVID-19 vaccine mRNA-1083, cytomegalovirus vaccine mRNA-1647, and cancer vaccine mRNA-4157.
No guarantees
There are no guarantees that Pfizer or Moderna will rebound strongly. Either company could encounter clinical setbacks or regulatory delays.
Perhaps the overall stock market could decline, bringing Pfizer and Moderna stocks down, too. However, the future for both of these COVID-19 vaccine makers appears to be brighter than in the recent past.
Adria Cimino has no position in any of the stocks mentioned. Keith Speights has positions in Pfizer. The Motley Fool has positions in and recommends Pfizer. The Motley Fool recommends GSK and Moderna. The Motley Fool has a disclosure policy.
