Pfizer and Moderna are now household names, thanks to the companies’ Covid-19 vaccines. But which pharma play belongs in your portfolio?
If you turn on the TV, flip on the radio, or scroll through social media, chances are you’ll see or hear the words Pfizer (PFE) and Moderna (MRNA) at least once a day. These two pharmaceutical companies are at the forefront of the vaccination efforts against Covid-19.
Both Pfizer and Moderna manufacture a new kind of vaccine. Called an mRNA (messenger ribonucleic acid) vaccine, it teaches the body’s cells how to make a protein that will trigger an immune response to a specific disease.
More traditional vaccines — like the COVID shot made by Johnson & Johnson (JNJ) — contain inactive disease-causing proteins. These directly trigger the immune response so it can fight the disease again more rapidly in the future.
MRNA vaccines are quicker and cheaper to make than traditional vaccines. So Pfizer and Moderna were the first drug-makers to win emergency use authorization from the Food and Drug Administration (FDA).
The competition between Pfizer and Moderna has been hot — and it will stay that way for a while. So let’s put these two pharma stocks head-to-head to see which one’s a better bet for your portfolio.
At a Glance: Pfizer vs. Moderna
|The development and manufacture of multiple medicines and vaccines
|The development and manufacture of mRNA vaccines
|Market Cap (8/12/21)
|New York, NY
Pfizer is a multinational pharmaceutical and biotechnology corporation that develops and manufactures medicines and vaccines to treat and prevent multiple conditions. It’s one of the 10 largest healthcare companies in the world.
When people mention “Big Pharma,” this is who they’re talking about.
Two German immigrants founded the company in the Williamsburg neighborhood of Brooklyn long before it was hip. In fact, Pfizer has been around for more than 170 years.
Today, Pfizer’s corporate headquarters are in Midtown Manhattan. But the company operates nearly 50 manufacturing plants all over the world.
Pfizer developed its Covid-19 mRNA vaccine in a partnership with Germany-based BioNTech (BNTX). The company invested $2 billion of its own funds on the project. It was the first working vaccine for the virus.
By comparison, Moderna is a much smaller and younger company than Pfizer. It was founded in 2010 and has its corporate headquarters in Massachusetts.
The company literally has mRNA in its name — Moderna’s original styling was ModeRNA Therapeutics. It was founded to commercialize the work of stem cell scientist Derrick Rossi, who co-discovered mRNA vaccine technology.
But Moderna is infamous for both its pompous CEO, Stephane Bancel, and its secretive reputation. Those factors have led to comparisons with Theranos, a notorious biotech startup that proved to be a fraud.
Still, investors are excited about Moderna and its potential.
So far, the Covid vaccine is Moderna’s only commercially available product. But it’s been enough to send shares of Moderna up by nearly 2,000% since before the pandemic. As a result, its market cap is more than half that of Pfizer’s based on just one drug.
Pfizer vs. Moderna: Products
Pfizer makes products you can find both behind and in front of the pharmacist’s counter. Chances are you have something made by the company in your medicine cabinet.
The company owns everyday remedy brands like Advil and Robitussin, as well as popular prescription drugs like Xanax and Celebrex.
And before the Covid-19 vaccine, Pfizer’s best-known product was the one-and-only “little blue pill,” aka Viagra.
All told, Pfizer currently manufactures more than 350 different pharmaceutical products. And its pipeline includes 95 more drugs, with dozens waiting in the wings for regulatory approval.
Strip away the COVID vaccine, and Pfizer’s business is still massive.
On the other hand, Moderna’s portfolio is far smaller.
The company currently has only one commercially available product on the market, the Covid-19 vaccine.
That’s not to say there aren’t other Moderna treatments coming down the pipeline.
Currently, the company is exploring vaccines to prevent diseases such as the cytomegalovirus (CMV). This common virus is one of the leading causes of birth defects in the United States.
Moderna’s CMV vaccine is preparing for Phase 3 trials. If it’s approved, Moderna will own global commercial rights for the product, which CEO Stephane Bancel estimates will be worth as much as $2-5 billion in sales annually.
Moderna’s other potential products include vaccines for the flu, the Zika virus, and respiratory syncytial virus (RSV), as well as a vaccine to guard against HIV.
If these products ever come to market, there could be massive potential for Moderna and its investors. However, the operative word here is “if.” It’s possible none of these vaccines could get regulatory approval.
Hands down, Pfizer.
Moderna’s research pipeline is exciting and contains several potential blockbuster vaccines. But, again, it’s possible that none of these products could ever receive approval and become commercially available.
So for practical purposes, Moderna is still a one-trick pony.
Still, sometimes companies can succeed by being the very best at one thing. Unfortunately, however, Moderna’s Covid-19 vaccine isn’t the only one on the market.
Meanwhile, Pfizer has hundreds of products already on pharmacy shelves, with dozens more coming soon. So even if Pfizer were to scrap its pipeline, there would still be plenty of drugs to bring in revenue.
Pfizer vs. Moderna: Earnings and Profitability
For the most recent (second) quarter, Pfizer posted earnings that soundly beat Wall Street predictions.
Earnings per share (EPS) skyrocketed by nearly 73%, and revenue basically doubled year over year. Just under half of the quarter’s $19 billion in revenue came from vaccine sales. Specifically, the Covid-19 vaccine accounted for $7.8 billion in direct sales during the second quarter.
Take a look at how Covid has impacted Pfizer’s business on an annualized basis:
But it wasn’t just Pfizer’s “COVID business” that saw growth. Stripping out the mRNA vaccine, Pfizer saw 10% year-over-year operational revenue growth.
However, these results underwhelmed investors. Pfizer’s stock hasn’t shot up. Instead, it has underperformed the broader S&P 500 this year. Shareholders have seen growth of only 32%.
By comparison, Moderna’s stock is a moon rocket. Year to date, shares have surged by more than 250%.
Moderna’s second-quarter earnings matched Wall Street expectations. Revenue came in at $4.4 billion. That’s a giant leap from the $66.4 million posted for the same quarter last year.
Of course, that’s 100% due to Covid vaccine sales. The company estimates it will supply as many as 1 billion doses in fiscal 2021, with as many as 3 billion supplied in fiscal 2022.
Moderna. Over the past year, the company has gone from literally zero sales to billions.
Pfizer vs. Moderna: Which Is a Better Buy?
There’s plenty to like about both stocks. The decision of which one is right for you comes down to your investing style and risk tolerance.
If you’re looking for a company with fantastic potential — but don’t mind some risk and volatility — go with Moderna.
On the other hand, if you like to play it safe and would prefer a company with a proven track record — and a dividend payout, to boot — Pfizer is the better choice.