In December, Pfizer Inc (PFE) won’t be able to produce up to half of the new vaccine. The organization acknowledged that it is facing logistics issues. Customers will receive just 50 million out of the previously expected 100 million doses. The production goal remains the same for the whole of next year as Pfizer plans to ship about 1 billion doses. Even the closest rival Moderna Inc (MRNA) is adjusting the sales targets. Thus, it has been announced that the company will ship 100-125 million doses in the first quarter of 2021. This brings into question the achievement of the target of 500 million doses for the year as a whole and suggests implicitly that capability issues remain. The obstacles to mass delivery of Pfizer and Moderna vaccines are similar as they must be transported and stored at temperatures no higher than -20 and -70 degrees Celsius, respectively.
The market responded to this news ambiguously. In the last week, though Moderna shares increased about 20 percent, Pfizer shares rose just 8 percent. Once again, players prefer a more costly and less mass-produced, but more compact, vaccine. In part, this disparity in valuation can be explained by the fact that in the United States, the number of firms able to assist in the delivery of drugs multiplied. This involves meat producers with cooling systems and Uber, which has formally appealed to the authorities to allow taxi drivers the right to distribute the vaccine to hospitals and pharmacies in need. Pharmacy chains also volunteered to open vaccination points, and some are already included in the US state program.
The unhealthy panic around the Moderna Inc (MRNA) stock is not justified in our view. The prices of their shares have increased 1.8 times in a month, while retaining unchanged distribution plans, and are now at least one third more expensive than their equilibrium value.
Pfizer Inc (PFE), which is less reliant on its sales from vaccinations, is undervalued. In the coming months, the shares have a potential of up to 5 percent. We suggest buying them on a drawdown when the price hits $37 a share, anticipating a short-term correction in the market.
