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Vitalii Liubimov's Avatar
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Jul 01, 2020

The Race to a COVID-19 Vaccine

The COVID-19 virus has wreaked havoc on countries around the globe in 2020, both in medical terms and economic ones. When the virus first popped up in the Wuhan province of China, local authorities took note of how quickly the virus spread. They took actions to shut down businesses and to limit public interactions between citizens. This became somewhat of a playbook for other countries as the virus spread around the world. The virus has taken a great toll on almost every economy around the world.

Many pharmaceutical and biotechnology firms are working on vaccines for the COVID-19 virus. By the time they are finished, there will likely be more than one that ends up getting approval from Federal Drug Administration in the United States. Other countries will likely have multiple options at some point in the future as well.

As an investor, trying to pick which company will be the ultimate winner is like trying to pick the winner of the Kentucky Derby. You have a number of horses in the field to choose from, but do you put all of your money on one horse? Or do you spread your money out and bet on a couple of different horses?

There are pharma giants like Merck (NYSE: MRK), Pfizer (NYSE: PFE), and Johnson & Johnson (NYSE: JNJ) in the mix. But there are also smaller firms like Novavax (Nasdaq: NVAX), Inovio Pharmaceuticals (Nasdaq: INO), and Moderna Biotechnology (Nasdaq: MRNA) that are in the mix as well.

Obviously the company that creates a successful vaccine will benefit greatly, but for some of the companies that are working on one, it could be a potential make or break moment for their stock. If it is a company like Merck that is first to bring a vaccine to market, it will be a huge boost to revenue for the company. But the company isn’t going to go out of business if it isn’t first. For a company like Moderna that has seen its stock jump more than triple since late February, it could be critical for the company to be one of the first companies with a viable vaccine.

Sticking with the horse racing comparison, you could consider it betting on one of the favorites versus betting on a long shot. Sure the long shot can come in and payoff in a big way, but the safer play is to bet on one of the favorites.

I took 10 stocks that are working on vaccines and created a watchlist on Tickeron. I included seven major pharmaceutical and biotech firms and I included the three smaller ones that I mentioned earlier. Once I had the list built, I sorted them by the fundamental analysis scores on the screener.

The screener showed that Astrazeneca (NYSE: AZN) is the top rated stock of the bunch with five of the seven categories coming in the positive range. Eli Lilly (NYSE: LLY) was the second highest rated with five positive readings and two negative ratings. Glaxosmithkline (NYSE: GSK) is third with three positive ratings and three neutral ratings.

We see the three smaller firms at the bottom of the ratings with Moderna at the very bottom. The screener shows five ratings in the negative range, one in the neutral range, and one where there was no rating. This didn't surprise me necessarily because these companies don't have the strong earnings growth of the bigger companies and they don't have the strong readings from the indicators that make up the SMR indicator.

After looking at the fundamentals, I flipped over to the technical analysis screener to see which of the stocks were rated the strongest there. Lilly was the top rated stock on the technical analysis screener with four positive ratings and two neutral ratings. There was a surprise stock in the number two spot and that was Inovio Pharmaceuticals. The stock has three indicators in the positive range and only one negative reading.

Moderna was once again at the bottom of the list with four indicators producing negative readings and only one producing a positive reading. Sanofi was the second worst on the technical analysis screen with two negative readings and no positive readings. 

So what does of all of this mean and how should you try to invest in order to benefit from a COVID-19 vaccine? You could invest in all 10 of these stocks and take your chances, but not even that would guarantee that you had the winner. There are other companies working on a vaccine, these just happen to be the frontrunners at this time. You could buy all three of the smaller companies and hope it's one of them that hits paydirt, but all three stocks have ramped up quite a bit over the last few months.

Personally I like Eli Lilly, even if it doesn't reach the market with a vaccine first. The company has seen earnings and revenue grow at solid rates over the last few years and there isn't any reason to think that won't continue. You could look to buy one or two of the bigger players, maybe Lilly and Astrazeneca since they rank the best when you weigh the fundamentals and technicals equally. Maybe add one of the smaller companies in with those two as a third stock in the portfolio. In that case, Inovio ranks the best when you look at a combination of technical analysis and fundamentals.

Going back to the horse racing analogy, if you were to use that last scenario with Lilly, Astrazeneca, and Inovio, you have three different stocks. Even if they aren't the first ones to market with a vaccine, Lilly and Astrazeneca aren't necessarily going to drop a lot. If they are one of the first to market with a vaccine, they can still see a significant upside move. Inovio is the kind of the long shot of the three. It would be a huge victory for the company if it were to be one of the first to market with a successful vaccine. While the stock has jumped six-fold since the end of February, it could still see significant gains. With a combination of solid stocks like Lilly and Astrazeneca and the potential of a stock like Inovio, you are spreading your risk around, but keeping a tremendous upside potential.

Related Ticker: MRK

MRK in upward trend: price rose above 50-day moving average on April 19, 2024

MRK moved above its 50-day moving average on April 19, 2024 date and that indicates a change from a downward trend to an upward trend. In of 54 similar past instances, the stock price increased further within the following month. The odds of a continued upward trend are .

Price Prediction Chart

Technical Analysis (Indicators)

Bullish Trend Analysis

Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where MRK advanced for three days, in of 334 cases, the price rose further within the following month. The odds of a continued upward trend are .

Bearish Trend Analysis

The 10-day RSI Indicator for MRK moved out of overbought territory on April 29, 2024. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 42 similar instances where the indicator moved out of overbought territory. In of the 42 cases, the stock moved lower in the following days. This puts the odds of a move lower at .

The Stochastic Oscillator may be shifting from an upward trend to a downward trend. In of 71 cases where MRK's Stochastic Oscillator exited the overbought zone, the price fell further within the following month. The odds of a continued downward trend are .

The Momentum Indicator moved below the 0 level on May 24, 2024. You may want to consider selling the stock, shorting the stock, or exploring put options on MRK as a result. In of 85 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .

The Moving Average Convergence Divergence Histogram (MACD) for MRK turned negative on May 24, 2024. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 44 similar instances when the indicator turned negative. In of the 44 cases the stock turned lower in the days that followed. This puts the odds of success at .

Following a 3-day decline, the stock is projected to fall further. Considering past instances where MRK declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .

MRK broke above its upper Bollinger Band on April 25, 2024. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.

Fundamental Analysis (Ratings)

Fear & Greed

The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to outstanding earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.

The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 73, placing this stock better than average.

The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is slightly undervalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (8.826) is normal, around the industry mean (5.632). MRK's P/E Ratio (935.643) is considerably higher than the industry average of (48.974). Projected Growth (PEG Ratio) (0.105) is also within normal values, averaging (3.004). Dividend Yield (0.023) settles around the average of (0.164) among similar stocks. P/S Ratio (5.549) is also within normal values, averaging (3.643).

The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating outstanding price growth. MRK’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.

The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.

Notable companies

The most notable companies in this group are Eli Lilly & Co (NYSE:LLY), Johnson & Johnson (NYSE:JNJ), Merck & Co (NYSE:MRK), ABBVIE (NYSE:ABBV), AstraZeneca PLC (NASDAQ:AZN), Pfizer (NYSE:PFE), Amgen (NASDAQ:AMGN), Bristol-Myers Squibb Co (NYSE:BMY), Gilead Sciences (NASDAQ:GILD), Biogen (NASDAQ:BIIB).

Industry description

The Major Pharmaceuticals industry includes companies that are involved in various processes of creating drugs to treat/prevent diseases. These companies engage in research, testing and manufacturing, as well as the distribution of pharmaceuticals into markets. Johnson & Johnson, Merck & Co., Inc., Pfizer Inc. and Novartis are among the largest companies in this category.

Market Cap

The average market capitalization across the Pharmaceuticals: Major Industry is 86.34B. The market cap for tickers in the group ranges from 72.83K to 739.66B. LLY holds the highest valuation in this group at 739.66B. The lowest valued company is CRXTQ at 72.83K.

High and low price notable news

The average weekly price growth across all stocks in the Pharmaceuticals: Major Industry was -1%. For the same Industry, the average monthly price growth was 3%, and the average quarterly price growth was 2%. MIRA experienced the highest price growth at 35%, while GIKLY experienced the biggest fall at -12%.

Volume

The average weekly volume growth across all stocks in the Pharmaceuticals: Major Industry was -1%. For the same stocks of the Industry, the average monthly volume growth was -15% and the average quarterly volume growth was 99%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 33
P/E Growth Rating: 54
Price Growth Rating: 57
SMR Rating: 64
Profit Risk Rating: 73
Seasonality Score: 16 (-100 ... +100)
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MRKDaily Signal changed days agoGain/Loss if shorted
 
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a developer of human and animal health products

Industry PharmaceuticalsMajor

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Pharmaceuticals Major
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