Pfizer and Moderna created life-saving vaccines. So why are their shares crumbling?

All three stocks rose spectacularly in 2021, thanks in large part to the success and strong sales of their Covid-19 vaccines. But 2022 hasn’t been so kind to them. Shares of Pfizer †PFE† are down about 15%, while its Comirnaty vaccine partner BioNTech †BNTX† has fallen by 35%. Modern †MRNA† has done even worse, with a plunge of more than 40%.

What gives? The sale of the Covid vaccines is not the problem. Pfizer has said it expects revenue from Comirnaty, which it shares equally with BioNTech, to reach $32 billion by 2022, while Moderna has forecast it could generate nearly $20 billion in revenue this year from its coronavirus take-up.

Part of the reason for the stock’s collapse may simply be that investors were already anticipating strong demand and doing what traders do best: buy the rumor and sell the news. Pfizer’s stock rose more than 60% last year. BioNTech shot up more than 215% in 2021, while Moderna’s shares rose nearly 145%.

Looking ahead, however, there may be some more gains associated with the vaccines, especially for the stocks of Pfizer and BioNTech. Health regulators in the United States approved booster doses of the Pfizer/BioNTech injection for 5- to 11-year-olds earlier this week.

Pfizer could also get an extra boost from Covid treatments thanks to the antiviral pill Paxlovid, which was approved late last year. Pfizer has said it expects $22 billion in revenue from Paxlovid this year.

Pfizer is arguably the best positioned of the three vaccine makers to thrive beyond Covid. The company has been in a buyout of late and recently announced plans to acquire the migraine drug maker Biohaven †emergency response team† for nearly $12 billion earlier this month.

“The deal is a good use of money for Pfizer, leveraging its sizeable war chest to diversify into an approved drug that gains market share and can grow revenue significantly,” CFRA Research analyst Stewart Glickman said in a report. the Biohaven news.

The acquisition follows a nearly $7 billion deal late last year to buy Arena Pharmaceuticals, a company that develops drugs to treat immune-inflammatory diseases. Pfizer also acquired cancer drug maker Trillium Therapeutics last year for more than $2 billion. And even after all these deals, the company still has about $24 billion in cash on its balance sheet.

Pfizer’s diversification is a key reason why analysts expect the company’s revenue to grow nearly 30% this year and its earnings per share increase by more than 50%.

In contrast, Moderna, which isn’t nearly as diversified as Pfizer, has to look for another big blockbuster. Nearly 97% of the company’s first quarter sales came from the Covid vaccine. Moderna’s sales are expected to rise about 20% this year, but analysts are forecasting a decline in profits.

CEO Stéphane Bancel said during Moderna’s most recent earnings call with analysts earlier this month that two of the company’s main goals were to “extend beyond infectious disease vaccines into therapeutics” and to find merger candidates. Moderna is also working on vaccines for other viruses, such as HIV and Epstein-Barr.

But the company also recently suffered a major public relations blunder. Moderna’s newly hired finance director had to resign just days after disclosure of financial irregularities under investigation at his former employer Dentsply Sirona †XRAY†a maker of X-ray machines and other dental equipment.

BioNTech, like Moderna, is also a bit of a one-trick pony at the moment, as almost all of its first quarter revenue came from Comirnaty. Pfizer generated only about half of its sales from the vaccine in the first quarter.

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