NEW YORK - Shares of vaccine maker Moderna Inc, BioNTech and Pfizer have benefitted from the emergence of a worrisome coronaviruses variant as investors look for winning bets in markets roiled by uncertainty in recent days.
Moderna shares have gone up 28% since last week when a variant called Omicron has triggered a global alarm. Over the time, the shares of vaccine partners Pfizer and BioNtech have climbed, with Pfizer up 6% and U.S. shares of BioNTech jumping 15%, in contrast to a decline in the S&P 500 of 2.5%.
Moderna and Pfizer BioNTech are the predominant vaccines used in the United States, and it is expected that they will be able to re-engineer their products to address the new variant if required.
Kevin Kedra, an analyst at GAMCO Investors, said that they are clear COVID plays and that anything that ramps up the intensity of COVID is going to benefit them. They are the front line of defense against COVID. Along with the rise in vaccine stocks, the market reaction to the new variant included a sell off in travel and leisure stocks and brief increases in stay-at- home stocks that thrived during lock-downs in 2020.
The companies have already reaped huge profits from their vaccines, juicing their stock prices this year. Moderna shares have gone up 240%, while BioNTech shares of Pfizer are up 47%, while Moderna shares are up 47%, while BioNTech is seeing a 340% gain.
Buy vaccine stocks is part of a playbook that we have learned over the last 18 months, give or take. Les Funtleyder, a healthcare portfolio manager at E Squared Capital, said that it is more mechanical than thoughtful.
We don't have all the information. Funtleyder said people are jumping the gun. They may be making the right decision, but we are not going to know for a long time. Much remains to be determined about Omicron, including how contagious it is, whether it will cause more severe disease than other variants and how protective existing vaccines are against it.
The head of Moderna, St phane Bancel, said vaccines are unlikely to be as effective against Omicron as they have been against previous variants, while BioNTech's chief said that the company's vaccine would provide strong protection against severe disease from the new variant.
Kedra said Bancel's comments may have weighed on Tuesday shares of Moderna and BioNTech. Moderna was down 5% and BioNTech was down 3%.
Analysts have been trying to assess the business implications of the new variant.
It seems more likely that we are going to have at least one more booster, said Daina Graybosch, senior research analyst at SVB Leerink.
Jefferies analyst Michael Yee said in a note that the use of primary vaccine for some, and administration of boosters for many, is an increase in need for continued protection against COVID 19 and its variants. The rise of Omicron has also reverberated through shares of makers of treatments for COVID - 19. Vir Biotechnology, which said its antibody therapy will likely maintain potency against the variant, has seen its stock increase by 45% since last week.
Shares of Adagio Therapeutics have soared 130% in volatile trading over that time. The company said it expects that the experimental antibody therapy will retain activity against Omicron.
Regeneron Pharmaceuticals said on Tuesday that the drug could be less effective against Omicron and is doing further studies to assess the potential impact using the variant's genetic sequence. Regeneron shares have fallen 1% since Omicron emerged.