Global Market Comments
September 24, 2021
Fiat Lux
Featured Trade:
(TESTIMONIAL)
(SEPTEMBER 22 BIWEEKLY STRATEGY WEBINAR Q&A),
(TLT), (TBT), (V), (AXP), (MA), (FSLR), (SPWR), (USO), (UNG), (PFE), (JNJ), (MRNA), (MS), (JPM), (FCX), (X), (FDX), (GLD), (UPS), (SLV), (AAPL), (VIX), (VXX), (UAL), (DAL), (ALK), (BRK/B), (BABA), (BITCOIN), (ETHEREUM), (YELL)
Below please find subscribers’ Q&A for the September 22 Mad Hedge Fund Trader Global Strategy Webinar broadcast from the safety of Silicon Valley.
Q: When’s the United States US Treasury bond fund (TLT) going to go down?
A: When J. Powell tapers, which will be either today or in 6 weeks. That's the time frame we’re looking at now, and people are positioning now for the taper—that's why financials are taking off like a rocket. Buy those financials and don't expect too much from your tech stocks for the next few months.
Q: What do you think of adding corporate or municipal bonds to my portfolio?
A: Don’t do that on pain of death please; you will lose money. Corporate bonds will get slaughtered the second interest rates turn because they have the most exposure from a credit point of view to any downgrades resulting from rising interest rates. Better to keep your money in cash than buy bonds here. It was a great idea 10 years ago, but a terrible idea today. Just buy cash or buy extremely deep-in-the-money LEAPS which will get you a 10-20% per year return.
Q: What are the chances that the government defaults?
A: Zero, because corporate profits this year will increase from $2 trillion to $10 trillion, spinning off massive tax revenues for the government. The deficit will come down substantially in the future as a result. Keep expecting upwards surprises in profits and taxable revenues. That may be why the (TLT) is staying so high.
Q: I need a customized LEAPS on a stock.
A: We do those for our concierge customers. If you’re interested, then email Filomena at customer support at support@madhedgefundtrader.com.
Q: What brand of shot did you get?
A: Pfizer (PFE).
Q: The Government is showing no sign of balancing a budget and the hole will only get deeper; what are your thoughts?
A: I agree, and that’s why I'm short the (TLT). All we need is a taper to really get some juice under that trade; we really don’t need that much. Ten-year US Treasury yields are now around 1.30% and we only need the yield to get up to about 1.70% for us to make a maximum profit on our positions. One taper hint and it could get us up to those levels.
Q: Why is Visa (V) dropping so much?
A: Fear of being replaced by Bitcoin. This is the big thing dragging all three credit card companies down, including American Express (AXP) and master Card (MA). That's why I have not added a Visa position among my financials in this go around.
Q: How can the Fed unwind their balance sheet and normalize interest rates to a historical average of 4-5%?
A: Quite easily: quit buying bonds. They’re still buying $120 billion/month worth. Technology has accelerated with the pandemic and we all know this is highly deflationary. I expect the next peak in interest rates to be only 3% or 3.5%, not the 6% we saw in the last peak in interest rates in the 2000s. So yeah, bonds are going to go down but not back to 2000’s level.
Q: Thoughts on the Johnson & Johnson (JNJ) shot?
A: No thank you. If you get to choose, Moderna (MRNA) is now producing the best immunity data on a year-to-date basis if you’re starting out from scratch. Some people are mixing, they start out with Pfizer and then get Moderna. They get a worse reaction because the Moderna initial reaction shot sees the Pfizer vaccine as a new virus, so you may get a small flu as a result of that.
Q: What is the put spread you’re recommending on the TLT?
A: The May 2022 $150-$155 vertical put spread. That is the sweet spot now on the short side on (TLT) LEAPS. You should earn a 115% profit in eight months on this trade if interest rates remain unchanged or fall.
Q: Do you expect the ProShares Ultra Short 20 year+ Treasury ETF (TBT) to make it to $20 this year?
A: Yes, I do; $16 to $20 isn’t that much of a move. Remember, the (TBT) is a two times short ETF.
Q: Are you recommending bank stocks?
A: Yes, Morgan Stanley (MS) and JP Morgan (JPM) are two of the best. They will lead the yearend rally starting from here.
Q: When do you expect the semiconductor shortage to end?
A: End of next year, or maybe even 2023, because what all the analysts keep underestimating is that the end of shortages is based on companies getting the chips they want today. The actual issue is that companies are designing billions of chips into their products at an exponential rate, and what they’ll need in a year from now is far higher than most people realize. The semiconductor shortage is much more structural than people realize—that's my theory. They don’t throw up a $2 billion fab overnight. So, this will keep going on for a while and be a drag on economic growth.
Q: Are you sure we won’t see $100 oil (USO)?
A: With oil, you're never sure about anything, although I highly doubt it. We’d have to have monster economic growth in China to get oil up to $100 a barrel. Right now, China is going the other way.
Q: What’s your view on the debt ceiling? Will it give us a good buying opportunity?
A: Probably not, our good buying opportunity was yesterday or Monday. These debt crises are always one minute before midnight solutions. They always get solved. Never underestimate the ability of Congressmen to spend money in their own district. So, I don’t think that would create a stock market crash like it might have done 20 years ago.
Q: What about Freeport McMoRan (FCX)?
A: It’s taking a dip here because of a possible real estate crash in China, and of course China is the world’s largest buyer of copper for apartment construction. I’m kind of taking a break here on Freeport McMoRan and US Steel (X) until we learn a little more about the China situation. They did move to start a bailout today. Let’s see if that continues.
Q: When will the airlines come back?
A: They’ll come back when business travel returns, which I think could be next year. If you eliminate the virus completely, these things double easily. That's the bet you’re making. Let’s see if the covid boosters work, the childhood shots work, and then you can take another look at Delta (DAL) and Alaska (ALK).
Q: If Bitcoin gains mass adoption, does that put banks out of business just like electric vehicles are making oil obsolete?
A: No, not if the banks go into the Bitcoin business. And the banks actually have the cash, resources, and infrastructure to take over the Bitcoin area once the technology matures. And the corollary to that is that the oil industry is that the majors have the infrastructure, the manpower, and the capital to take over the alternative energy business if they choose to do so and oil goes to zero, which it eventually will. The proof of that is the largest investor in all the Silicon Valley energy startups are Saudi Arabian venture capital funds. They’re huge investors in solar here. If Saudi Arabia has a lot of oil, they have even more solar. Believe me, I’ve been there.
Q: Will a lack of inventory and rising interest rates end the bidding wars on houses soon?
A: Only if you consider 10 years soon. That is how long it will take for the sizes of different generations to come into balance, the Millennials (85 million) versus the Gen Xers (45 million). That’s when the housing bubble will end, but that won’t be for another decade. We still have a structural shortage of new home construction (about 5 million units a year) because all the home builders who went bust in the financial crisis in 2008/2009 and never came back—all of that new construction is still missing. And the surviving ones haven’t increased production to meet that shortfall because they want to manage their risk. Eventually, they will and that probably will be the next top, but that’s really 2030 type business.
Q: What about Federal Express (FDX)?
A: Labor shortages. It's hitting (UPS), (FDX), the Post Office, and DHL too—all the couriers.
Q: When do you think gold (GLD) and silver (SLV) rise back to 2,000?
A: I am avoiding gold and silver as long as Bitcoin has buyers. The action in Bitcoin is 10x the movement you get in gold and that’s attracted all the speculative capital in the market, draining all interest from gold, which hit a new six-month low just last week.
Q: What’s your buy target for Apple (AAPL)?
A: I would say if you can get it at $135, that would be a gift. We did get close to $140 at the lows this week; that’s when you start nibbling, and then you double up again at $135. I doubt Apple is going down more than 10% in this cycle. There are too many people still trying to get into it. And they’re still the largest buyer of stock in the world. They only buy one stock, their own.
Q: I never got any IPath Series B S&P 500 VIX Short Term Futures ETN (VXX) alerts.
A: That's because we never sent any out. (VIX) has become an incredibly difficult game to play, accumulating positions for months and then trying to get out on a one-day spike that lasts a few minutes. The insiders have too much of a house advantage here, who only play from the short side. There are too many better fish to fry.
Q: What about the Apple electric vehicle?
A: I’ll believe it when I see it; I've been hearing about this for something like seven years. My guess is that Apple is more likely to supply consoles and parts to other EV makers and help them get into the game with software and so on. I think that will be Apple's role in all of this.
Q: How much has China Evergrande Group stock fallen?
A: It’s a really illiquid stock in China so we never got involved in it. I think it’s down more than half. Even the professional short-sellers like Jim Chanos and Kyle Bass, have been targeting that stock for 10 years are now screaming they’re vindicated. Of course, they lost fortunes in the meantime. So, I'll pass on that one.
Q: What about stop losses on LEAPS trades?
A: I don’t really run LEAPS portfolios or issue stop losses. The idea is to run these into expiration, and we’ve never had one expire out of the money, although I may break that record if TLT doesn’t turn around in the next three months.
Q: How would autonomous trucking impact rail transportation?
A: They’re two totally different things. Trucking companies like Yellow Corporation (YELL) carry smaller cargo for local deliveries or small long-distance deliveries. 7Some 70% of all railroad traffic is coal going to China, and the rest is bulk commodities like wood chips, iron ore, etc. Trucks don’t carry any of that, so they’re totally separate businesses. But, if we went totally autonomous on trucking, it would make all the main trucker companies massively profitable, as they get rid of their drivers. Right now, every trucking company in the US has a driver shortage.
Q: United Airlines (UAL) pilots are now ordered to get vaccinated.
A: I think within months to hold a job anywhere in the US, you will have to get vaccinated. They do not want you in the office without a vaccination. Jobs are not worth risking lives, and we hit 2,000 deaths again yesterday. The corporations are taking the lead, not the government. The exception will be the politically motivated companies, like the My Pillow Guy; I doubt they'll ever require vaccinations at My Pillow. And there are a few other companies such as Hobby Lobby that are also anti-vaxers. But all public transport companies, hospitals, etc., are going to say get vaccinated or get out—it’s very simple.
Q: Should I buy Berkshire (BRKB) here?
A: Yes, it’s a great entry point, even if you can't get my price. Go higher in the strikes or go farther out in maturity.
Q: Is copper metal (CPER) a buy here?
A: Probably long term, but short term will be subject to the whims of the Chinese real estate crisis if there is one.
Q: Won’t Natural Gas (UNG) outperform in the power grid since all EVs must be charged?
A: Not if the grid is 100% electric. Natural gas still has carbon in it, although only half as much as oil or gasoline. I think even natural gas eventually gets phased out because you can expect solar panels to improve by 80% over the next ten years. At that point, any other energy source won’t be able to compete—oil, natural gas, you name it. And that is why you don’t see any long-term money going into carbon energy sources.
Q: Iron ore has just gone from $200 to $100, why are you bullish?
A: Yes, Because it has just gone from $200 to $100. Eventually, China recovers, despite a short-term financial and housing crisis. Buy low, sell high—that’s my revolutionary new strategy.
Q: What are your thoughts on Bitcoin vs Ethereum?
A: I think Ethereum will outperform Bitcoin because it has a more modern technology. It’s only six years old, vs 12 years for Bitcoin. It’s also more efficient, using less energy in its production. In fact, we did get a double in Ethereum in August as opposed to only a 50% move in Bitcoin.
Q: Do you have any concerns on holding the financials through earnings in October?
A: No, I think the results will be fantastic, and I want to be long going into those.
Q: What does the current situation with China mean for Alibaba (BABA)?
A: Keep your stocks, you’ve already taken the hit—down 53%. The next surprise is that China quits beating up on capitalism and these things will all recover bigtime. However, any options you may have could expire before that happens. So, keep the stocks, get rid of the options, salvage whatever time value you can, and then wait for China to start doing the right thing.
Q: What are the best solar stocks?
A: First Solar (FSLR) and SunPower (SPWR), which have both done great.
Q: If bonds are a no-no, and governments are getting more indebted than ever, who will buy them?
A: Governments. The only buyers of bonds now are non-economic buyers. Those would be governments, central banks, and banks who are required by law to own certain amounts of bonds to meet regulatory capital requirements. No individual in their right mind is buying any bonds here at all, nor is any financial advisor recommending them.
To watch a replay of this webinar with all the charts, bells, whistles, and classic rock music, just log in to www.madhedgefundtrader.com, go to MY ACCOUNT, click on GLOBAL TRADING DISPATCH, then WEBINARS, and all the webinars from the last ten years are there in all their glory.
Good Luck and Stay Healthy.
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
Mad Hedge Biotech & Healthcare Letter
September 16, 2021
Fiat Lux
FEATURED TRADE:
(RIDING THE COVID-19 VACCINE MOMENTUM)
(PFE), (BNTX), (MRNA), (JNJ), (SNY), (GSK), (TRIL)
The pandemic is exhibiting hints of easing, and one of the names playing a critical role in the vaccine rollout that has made this step towards normalcy possible is Pfizer (PFE).
Actually, Pfizer stock has hit an all-time high courtesy of its COVID-19 vaccine, Comirnaty, which it developed with German biotech firm BioNTech (BNTX).
While this is undoubtedly an exciting time for the company, many investors wonder whether this period also marks the spectacular of Pfizer, and things will go downhill from here. After all, several of its patents are set to expire starting in 2025.
My short answer to this question is no. This isn’t the beginning of the end for Pfizer. Looking at the company’s history, pipeline, and trajectory, I can say that Pfizer’s rise is just getting started.
One of the key reasons behind my belief is Pfizer’s robust pipeline.
To date, the company has roughly 100 drugs queued for regulatory clearance, while others are slated for late-stage clinical testing.
That means that regardless of the patent expirations in Pfizer’s horizon, the company’s strong and diverse pipeline can easily counteract the blow from the loss of exclusivity.
Just last month, Pfizer received full approval from the US FDA for Comirnaty.
Since fellow vaccine developers like Moderna (MRNA) have yet to achieve the same, this makes Pfizer the first COVID-19 vaccine to gain this endorsement from the regulatory committee.
Needless to say, Pfizer could capitalize on this massive opportunity to boost its profits in the quarters.
The availability of a fully approved COVID-19 vaccine could allow establishments to oblige mandatory vaccinations, which could obviously lead to higher demand for Comirnaty, as over 100 million Americans have yet to receive at least a single jab.
In the second quarter of 2021, the company reported $19 billion in revenue, indicating a 92% year-over-year climb thanks to the $7.8 billion raked in by its COVID-19 vaccine.
Pfizer now estimates Comirnaty revenue to reach roughly $33.5 billion, indicating an expected 2.1 billion doses to be delivered within the year.
Excluding Comirnaty’s sales, Pfizer’s revenue increased by 10%. This strong momentum led the company to raise its 2021 full-year guidance to somewhere between $78 and $80 billion.
Before Comirnaty, though, Pfizer had already been known as a prolific vaccine developer.
One of its prized creations is the pneumococcal vaccine Prevnar, which generated $2.52 billion in revenue in the first 6 months of 2021.
Meanwhile, its tick-borne encephalitis vaccine, marketed as TicoVac, gained FDA approval in July and could bring in roughly $1 billion per annum.
Riding this momentum, Pfizer has been busy developing another potential moneymaker in this segment in the form of its respiratory syncytial virus (RSV) vaccine candidate: RSVpreF.
And if the Phase 3 results for RSVpreF come anywhere near its Phase 2 trial, then Pfizer has another blockbuster in its hands.
This is because the RSV vaccine market is projected to grow to approximately $10 billion by 2030, and Pfizer’s candidate is targeting 72% of that population.
However, the RSV market will be a crowded space with the likes of Johnson & Johnson (JNJ), Sanofi (SNY), and GlaxoSmithKline (GSK) working to fill this unmet medical demand.
So, realistically, Pfizer’s RSVpreF has the potential to capture 20% market share, translating to $2.1 billion in annual revenue.
Apart from its vaccine-related efforts, Pfizer’s core businesses have been growing as well. Top contributors come from its oncology arm, specifically Eliquis and Ibrance.
Its recent acquisition of Trillium Therapeutics (TRIL) is anticipated to serve as a catalyst for Pfizer’s cancer segment in the next years as well.
Overall, Pfizer has a blockbuster drug pipeline and an impressively successful COVID-19 vaccine rollout. These provide the company with a long runway for solid and steady growth.
Mad Hedge Biotech & Healthcare Letter
August 5, 2021
Fiat Lux
FEATURED TRADE:
(LET THE BIOTECH BUYOUTS BEGIN)
(TBIO), (SNY), (MRNA), (PFE), (BNTX), (ARCT), (GSK), (JNJ), (MRK), (BLUE), (CVAC)
One of my predictions for this year just came true: the biotechnology buyouts have begun.
In my letter last January, I forecasted that the growing popularity of the mRNA technology courtesy of the COVID-19 vaccines from Moderna (MRNA) and Pfizer (PFE / BioNTech (BNTX) would trigger acquisitions of smaller biotechnology companies this year.
I predicted that bigger players in the healthcare industry would scoop up smaller players to stake a claim in this quickly growing space.
Topping our list of buyout candidates is Translate Bio (TBIO)—the very same company hogging headlines in the past days following its $3.2 billion acquisition by Sanofi (SNY).
The all-cash deal values each TBIO share at $38, representing a premium of over 30% above the stock’s price. If all goes well, the deal should be completed by the third quarter of 2021.
This is one of the first major moves by Sanofi following the healthcare giant’s recent pivot into vaccines.
However, this isn’t the first time Sanofi and TBIO worked together.
The two companies have actually started collaborating back in 2018, working on a potential mRNA-based flu vaccine—a project that has Sanofi and TBIO ahead of the pack, with BioNTech and Arcturus Therapeutics Inc. (ARCT) trailing behind.
Sanofi and TBIO’s mRNA seasonal flu vaccine candidate is expected to commence with Phase 1 results expected to be out by the fourth quarter of this year.
Considering that Sanofi is one of the leading vaccine makers in the world with roughly $3 billion in sales in flu vaccines alone in 2020, it won’t come as a surprise if their candidate breezes through the trials.
Even prior to this acquisition, Translate Bio has been working on using its mRNA platform to develop vaccines and treatments for a broad range of diseases like liver and pulmonary ailments.
So far, its novel pipeline has 2 clinical-stage programs along with 7 pre-clinical work covering direct therapeutics and vaccines.
One of its lead candidates is MRT5005, which is an mRNA-based therapy for cystic fibrosis (CF).
This is a groundbreaking treatment because it takes advantage of mRNA’s capability to deliver proteins to lung cells. It’s also extremely non-invasive, as patients can simply inhale the mRNA drug into their bodies.
Other than helping with the treatment of CF, this inhalation delivery system can also open avenues for other pulmonary targets.
Most importantly, TBIO’s MRT5005 doesn’t only offer treatments. It actually is a cure for CF.
TBIO’s work on CF treatment is extremely important. This disease is terrible, recording a median age of death among patients in the US as 30.6 years old. In this country alone, over 30,000 people suffer from the condition, and more than 70,000 are recorded worldwide—and the numbers continue to climb each year.
In terms of the CF market, the global demand for treatments for this disease is expected to reach $16.3 billion by 2026, hitting roughly 16.8% in CAGR over the years.
With the acquisition of Translate Bio, Sanofi plows ahead of its competitors in the space, including Pfizer, GlaxoSmithKline (GSK), Johnson & Johnson (JNJ), and Merck (MRK), as the sole Big Pharma company with a wholly-owned in-house mRNA platform.
This is on top of Sanofi’s recent $470 buyout of another mRNA company, Tidal Therapeutics, to bolster its immuno-oncology and inflammatory diseases segments.
Apart from its aggressive buyout strategy, Sanofi also announced its plan to allocate roughly $476 million annually to a “vaccines mRNA Center of Excellence” with the goal of queuing at least six mRNA-based candidates in clinical trials by 2025.
Allotting $476 million to this plan is a telling move on the company’s future direction, as it comprises a substantial fraction of Sanofi’s $6.5 billion overall R&D budget.
These moves strongly signal that Sanofi’s going all-in on the mRNA platform, which could obviously pose a challenge to the likes of Moderna and, of course, BioNTech.
With smaller cap companies like bluebird Bio (BLUE) and CureVac (CVAC) still up for grabs, it’s only a matter of time before another big company decides to follow suit.
Mad Hedge Biotech & Healthcare Letter
July 29, 2021
Fiat Lux
FEATURED TRADE:
(A BIOTECH PREPARED FOR ANOTHER DOOMSDAY MARKET)
(BNTX), (PFE), (MRNA), (AZN), (JNJ), (GSK), (GILD)
If you’ve heard of Harry Dent Jr., then you know that he’s the economist who correctly and accurately forecasted the Japanese economic downturn back in 1989. He also hit the nail on the head when he predicted the collapse of the dot.com bubble in 2000.
Now, he’s saying that the stock market will crash in the next three months, describing it as “the biggest crash of our lifetime.”
There’s no precise method to determine if his pessimistic outlook is justified thus far.
Nonetheless, even if Dent turns out to be right, I don’t believe that all stocks will plummet. There are a handful of stocks that could soar if the stock market does crash this summer.
For instance, I think vaccine stocks would most likely take off if the new variants of COVID-19 triggered a market crash in the coming months.
After all, the best weapons we have in overcoming these issues are still vaccines.
I also think that one of the biggest—if not the biggest—winners in this segment is BioNTech (BNTX).
Let me share with you the reasons.
For one, BioNTech is actually the smallest of the biopharmaceutical companies in the vaccine market today.
Catalysts typically generate larger swings in stocks that hold smaller market capitalizations compared to those with bigger market caps.
It’s also telling that BioNTech and its co-vaccine developer, Pfizer (PFE), have started delving into tactics to handle the continuous rise of the Delta variant.
So far, what the partners have suggested includes adding a third dose to the COVID-19 vaccine to boost the immunity and protection of people against the new strain.
The two are also looking into beginning their clinical testing on a modified version of their vaccine, which would specifically target the Delta variant, by August.
BioNTech’s valuation also plays a key role. The company so far is the cheapest among the leading vaccine stocks, which include Moderna (MRNA) and AstraZeneca (AZN), based on its forward earnings multiples.
To date, BioNTech trades at roughly 6.3 times its expected earnings—a low valuation that wouldn’t last long, especially if fears about the new variants spark another massive downturn in the market.
Thus far, BioNTech and Pfizer have delivered roughly 392 million vaccine doses to the US alone.
However, the country is anticipating increasing demand for it, pushing it to sign up for an additional 200 million doses.
The duo plans to deliver 110 million doses to the US by the end of 2021 and the rest of the orders by April 2022.
In a separate agreement, the US also ordered 500 million doses as donations to developing countries across the globe.
In comparison, Moderna delivered 137.3 million, while Johnson and Johnson (JNJ) supplied 13.1 million.
On top of these, Pfizer and BioNTech are working to expand the reach of their vaccine.
The companies recently sealed an agreement with Biovac, a company in South Africa, to produce vaccine shots from a plant in Cape Town. Similar initiatives are under exploration in Latin America.
Riding the momentum of its COVID-19 vaccine, BioNTech is also working to develop a highly effective and widely tolerated malaria vaccine.
The malaria vaccine candidate is expected to build on two decades’ worth of mRNA research, which BioNTech used to co-develop the COVID-19 vaccine with Pfizer.
The clinical trial for this new project is planned to start by the end of 2022.
At this point, only one malaria vaccine is available on the market: GlaxoSmithKline’s (GSK) Mosquirix, which offers about 30% effectiveness in safeguarding kids from the mosquito-borne virus.
If successful, BioNTech will be easing a massive burden globally, as over 400,000 children die from malaria every year.
In addition to its malaria vaccine candidate, BioNTech is also looking into using its mRNA expertise to diversify its pipeline to include cancer treatments, including colorectal cancer, advanced melanoma, and other malignant solid tumors.
BioNTech’s move to attempt to conquer the oncology sector gained even more traction following its recent acquisition of Kite, a manufacturing plant under Gilead Sciences (GILD).
Kite primarily focuses on an experimental kind of cancer treatment relating to neoantigen T-cell receptor cell therapy.
In the first quarter of 2021, BioNTech was able to boost its sales by over 7,295%.
Its total revenues within that period reached $2.49 billion, which indicates a healthier revenue stream compared to its main competitor, Moderna, which raked in $1.9 billion.
In terms of sales outlook for the entire year, BioNTech also forges ahead with $26 billion, while Moderna anticipates $19.2 billion.
Needless to say, these numbers show how undervalued BioNTech has been lately.
Given the new developments concerning the new variants and the company’s expanded coverage of the market, it’s clear to see that the future looks bright for BioNTech regardless of Dent’s doomsday market predictions.
Mad Hedge Biotech & Healthcare Letter
July 27, 2021
Fiat Lux
FEATURED TRADE:
(A RESURGENCE STOCK READY FOR THE NEXT WAVE)
(MRNA), (PFE), (BNTX), (JNJ), (NVAX)
What truly scares investors isn’t really the potential relapse of the financial metrics that would undoubtedly take center stage again since the earnings season already commenced.
As we have been recently reminded, the world’s worst nightmares still place the COVID-19 virus front and center—this, despite the pandemic supposedly already under control.
COVID cases are starting to rise again, and the delta variant is seen as the latest addition to the problem.
That strain has actually become dominant in the United States, sending unvaccinated individuals to hospitals faster than its predecessor.
This delta variant is said to be more contagious than the previous virus. In fact, the fear over this new wave is incredibly high that the US government decided to issue a “Do Not Travel” advisory for the UK, which has been suffering from outbreaks despite their high vaccination rates.
If this is yet another indication of another disastrous year like 2020, then stocks would most certainly fall.
However, stocks managed to bounce back after the initial scare.
While this sparked a debate on the reason behind the recent sharp losses, investors are encouraged to remain focused on how the virus can still affect their lives despite the strong temptation to believe that the stock market will continue to rise from here.
Vigilance is the key to survival these days. It’s critical to bear in mind that the virus that upended our world and forced us to shutter our economies may not be in retreat just yet.
After all, even paranoids have enemies.
That’s what makes the mRNA vaccines a promising answer to this new issue.
Moreover, against this volatile environment, one stock looks to be extremely intriguing: Moderna (MRNA).
Amid the analyses and reports, the most consistent thing about Moderna—and the most notable quality it has—is its solid science.
At its core, mRNA technology can transform the cells in a person’s body into mini-factories with the ability to produce virtually any kind of protein that Moderna wants.
So when people get inoculated with mRNA-1273, the mRNA instructs the body’s cells to start producing inactive replicas of COVID-19 proteins.
Then, the body’s immune system responds to those replicas.
This process effectively teaches the person’s immune system how to protect itself and fight off any type of exposure to the COVID-19 virus proteins.
Moderna’s vaccine is based on mRNA technology, which is primarily an information molecule. This means that this could be used to create various products, which would reach better technical success over time.
Basically, one major benefit of mRNA is that the chemistry behind the formulation for treatments like the flu shot uses exactly the same when creating more advanced products like the COVID-19 vaccine or even the HIV vaccine.
This makes it easier for Moderna to keep developing vaccines and other treatments because the company no longer needs to implement major changes in its manufacturing system for every new drug.
This is incredible leverage for Moderna, particularly across its manufacturing infrastructure and R&D. With the money saved on this advantage, Moderna can make massive investments in other segments like IT and marketing.
In fact, their quickness to market their vaccine is one of the reasons for Moderna’s success in the COVID-19 vaccine race.
Over the course of the last 52 weeks, Moderna stock has performed within the range of $54.21 to $342.51. The stock also managed to sustain its momentum from the surge of investor interest last year and is up by 207% so far this 2021.
In ensuring that it doesn’t get too far behind the leader, Pfizer (PFE)-BioNTech (BNTX), it secured a huge chunk of the market share as well.
Now, there’s a new virus strain threatening to take down everything we’ve worked hard to rebuild since the first COVID-19 case broke last year. This could mean an additional revenue stream for Moderna considering that it can deliver at lightning speed compared to other developers.
Aside from its work on COVID-19, Moderna is also looking for ways to use mRNA technology to develop treatments for heart failure, cancer, and other severe conditions.
To date, Moderna has roughly 24 mRNA-based programs in its pipeline, ranging from the Zika vaccine to cancer treatments.
Admittedly, buying Moderna stock presents risks. However, the greed and fear that continue to rule the markets places Moderna in a unique position to be the answer to all the questions.
Moderna is estimated to rake in $18.8 billion in revenue for 2021, thanks largely to its COVID-19 vaccine, with the number expected to rise as the company ramps up production to reach 3 billion doses in 2022.
Moderna’s dominance today doesn’t necessarily mean it’ll last forever, especially with competition coming in from Johnson & Johnson (JNJ) and Novavax (NVAX).
However, the technology it uses and the fact that it’s one of the only two biotechnology companies that successfully executed the mRNA place Moderna in an extremely unique, profitable, and secure position for the foreseeable future.
