How is COVID fatigue in the market affecting the outlooks for pharmaceutical stocks? In this Motley Fool Live segment from “The Pharma & Biotech Show,” recorded on March 23, Fool.com contributors Taylor Carmichael and Keith Speights discuss some of their favorite stocks that shouldn’t be abandoned now.
Taylor Carmichael: If you’re a Moderna ( MRNA 1.16% ) investor, really the thing to think about is that the multiple has just been crushed, just like all of the COVID stocks the multiples are being crushed. This would be a horrible time to sell Moderna. They have an awesome future. Novavax ( NVAX 1.90% ) same boat, they have an awesome future and the market is so pessimistic about anything COVID-related that everything has gotten super cheap.
Keith Speights: You’re setting us up. You are setting us up perfectly Taylor. No, that’s great because our first topic today was to talk about COVID fatigue in the stock market and that’s exactly what you’re talking about here. What’s your thoughts on this?
Taylor Carmichael: Well, COVID fatigue is what I would describe just what I’m seeing and then the example I’ll use is a company called Vir Bio. Vir Bio ( VIR -2.89% ), the ticker is VIR. Vir Bio has a COVID treatment. This is not a vaccine, it’s a COVID treatment for people who are hospitalized and or very sick. You didn’t get vaccinated or the vaccine didn’t work, you’ve got COVID, you’re in the hospital, you are really sick, you might give them this treatment. It is distributed by Glaxo. One time I mistakenly said Pfizer, but I’m 99 percent sure it’s Glaxo. It’s distributed by Glaxo, marketed by Glaxo. That explains their fantastic numbers I’m about to share with you.
Here are the numbers. Let me run through them real quick. Profit margin of Vir is 48 percent. Revenue of Vir over the last 12 months, $1.1 billion. Quarterly revenue growth of Vir 46,000 percent. Then you look at the multiple the market is giving this company, their forward PE one, their price per sales two, so these are unbelievably tiny multiples for a company that is going to make a billion, two billion, three billion, it’s just remarkable. Not to say that Vir can’t get cheaper in the short-term, of course it can. But, a lot of this negativity has already been priced in.
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