The roaring 2020s started with a red-hot market that melted down into a 35% sell-off in less than a month. A melt-up rally followed, with all the losses erased and market indexes hitting all-time highs. Investors have been whipsawed this year, and one thing that could bring a sense of normalcy back to the world is a COVID-19 vaccine.

The question on investors’ minds globally is when there will be such a vaccine. While the statistics have shown that the majority of deaths are in those over the age of 70, many of whom had pre-existing conditions exacerbated by the virus, the only solution to getting back to normal is a successful vaccine.
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Many companies have entered the vaccine fray, and four top companies, including three major pharmaceutical leaders, are in late-stage testing. The U.S. president has said it is possible for a breakthrough soon, and there is a potential for millions of doses to be ready by the end of the year if FDA approval is granted. However, most feel that is could be mid-2021 before there is a sufficient amount of the vaccine to inoculate the United States and the rest of the world.

Shares of these four top companies are rated Buy at top Wall Street firms. It makes sense for more conservative investors to look at the big pharmaceutical companies in the race, while aggressive investors may want to put some chips on a smaller player. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

AstraZeneca

This stock essentially has traded sideways since April and offers a very good entry point. AstraZeneca PLC (NYSE: AZN) is a global, innovation-driven biopharmaceutical business that focuses on the discovery, development and commercialization of prescription medicines, primarily for the treatment of cardiovascular, metabolic, respiratory, inflammation, autoimmune, oncology, infection and neuroscience diseases. AstraZeneca operates in over 100 countries, and millions of patients worldwide use its innovative medicines.

AstraZeneca also has an outstanding pipeline, especially in oncology. The broad pipeline of next-generation investigational medicines is focused on four main disease areas: ovarian, lung, breast and haematological cancers. These are being targeted through four key platforms: immuno-oncology, the genetic drivers of cancer and resistance, DNA damage repair and antibody drug conjugates.

Earlier this month, the company’s coronavirus vaccine study voluntarily paused on a single safety event, and some in the media suggested it was transverse myelitis. The vaccine testing has resumed in the United Kingdom, raising hope that one of the leading candidates in the global race to develop an injection that can stem the pandemic is back on track. The University of Oxford, which developed the vaccine in partnership with AstraZeneca, said that some 18,000 people have so far received the vaccination in trials.

Shareholders receive a 2.50% dividend. BofA Securities has a $69.40 price objective for the stock. The Wall Street consensus target price is $59.10 per share. AstraZeneca stock closed Tuesday at $55.11.

Johnson & Johnson

With a diverse product base and very popular and solid branding, this is among the most conservative big pharmaceutical plays for investors. Johnson & Johnson (NYSE: JNJ) is one of the top market cap stocks in the health care sector and raised its dividend this year for the 56th consecutive year. With everything from medical devices to over the counter health items and prescription drugs, the company remains one of the most diversified health care names on Wall Street.

The health care giant also has one of the most exciting pipelines of new drugs in the sector. That combined with the solid over-the-counter product business makes the stock an outstanding holding for conservative accounts with a long-term investment outlook. The company generates a little over half of its sales in international markets, which are expected to see higher spending on health care over the next 10 years and beyond.

Johnson & Johnson recently published data from an interim analysis of a Phase 1/ Phase 2A trial evaluating the company’s COVID-19 vaccine candidate Ad26.COV2.S. This follows the company’s announcement last week that it was advancing the vaccine into Phase 3, representing the fourth vaccine to enter late-stage testing in the United States.

The dividend was raised in the spring to $1.01 per share, which equals a 2.75% yield. The BofA Securities price target is $175, while the consensus target is $165.06. Johnson & Johnson stock closed at $147.06 on Tuesday.
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Moderna

This company has had a ton of attention as smaller player with a potential vaccine to combat the COVID-19 pandemic. Moderna Inc. (NASDAQ: MRNA) develops therapeutics and vaccines based on messenger RNA for immuno-oncology and the treatment of infectious, rare and cardiovascular diseases.

As of last year, the company had 11 programs in clinical trials and 20 development candidates in six modalities comprising prophylactic vaccines, cancer vaccines, intratumoral immuno-oncology, localized regenerative therapeutics, systemic secreted therapeutics and systemic intracellular therapeutics.

Moderna has strategic alliances with AstraZeneca, Merck, Vertex Pharmaceuticals, Biomedical Advanced Research and Development Authority, Defense Advanced Research Projects Agency and the Bill & Melinda Gates Foundation, and well as a research collaboration with Harvard University.

Moderna’s CEO and a COVID-19 panel recently agreed that an emergency use authorization for the vaccine should come by the end of this year, with Moderna indicating it will be commercially ready for a November 1 launch. This vaccine candidate relies on injecting snippets of a virus’s genetic material, in this case mRNA, into human cells. They create viral proteins that mimic the coronavirus, training the immune system to recognize its presence. This technology has never been licensed for any disease. If successful, it would be the first mRNA vaccine approved for human use.

The gigantic $108 Oppenheimer price target compares to a $92.54 consensus target and the Moderna stock closing price on Tuesday of $70.52.

Pfizer

This large-cap pharmaceutical company is working with BioNtech on a vaccine. Pfizer Inc. (NYSE: PFE) is a global biopharmaceutical company with a diversified portfolio of products and pipeline candidates, and it is one of the largest pharmaceutical companies in the world as measured by market capitalization and revenue.

Pfizer and BioNTech are also developing an mRNA vaccine, based on the German company’s earlier efforts to use the technology in experimental cancer vaccines. Pfizer has signed a nearly $2 billion contract with the U.S. government to provide 100 million doses by December 2020. That agreement would go into effect when and if the drug is approved and delivered.

The two companies have launched a trial that combines Phase 2 and Phase 3 by enrolling a wide population in areas where the virus is very prevalent. They have expanded the trial to include 44,000 people across multiple countries. The project is aiming to seek regulatory review before the end of the year and hopes to supply 1.3 billion doses by the end of 2021.

Pfizer stock investors receive a 4.18% dividend. RBC has set a $43 price objective. The consensus target price is $41.79, and the shares closed most recently at $36.17.

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These companies have a very good shot at crossing the finish line first. It seems to make sense for investors to go with the big pharmaceutical companies as a failure in the final trials would be a negative, but they all have huge product lines and robust pipelines with future drug potential and big earnings. Any investor disappointment should be temporary.

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