In late 2020, as the results from trials of COVID-19 vaccines poured in, it had been quite easy for investors to use the results as a benchmark for future success. Indeed, this strategy paid off for many. Twelve months later, as COVID-19 pills and booster shots become the main topic of discussion, it is a little more difficult to pick winners in the health industry. Several drug giants, like Merck & Co., Inc. (NYSE:MRK), Pfizer Inc. (NYSE:PFE), and Johnson & Johnson (NYSE:JNJ), among others discussed in detail below, are developing similar products.
According to official calculations, based on the numbers reported by government agencies around the world, over 7 billion COVID-19 vaccine doses have been administered around the world. Over 3 billion people have been fully vaccinated, representing nearly 40% of the global population. Drug giants, which make and sell these vaccines, have benefited the most from this, increasing revenues by manifold overnight. The pace of the vaccinations has also helped with economic recovery - the US GDP grew at 6.7% annualized in the second quarter of 2021.
More recently, oral treatments for COVID-19, like pills, have also been touted as a possible defense against the deadly virus. With drug companies presently developing these pills, the overall outlook on the health industry, which had been in danger of decreasing on the backend of this year as the vaccine rollout slowed, has picked up pace once again. Investors eager to take advantage of this opportunity should explore the stocks mentioned below in detail to identify the ones most
With this context in mind, here is our list of the 11 best Covid vaccine and pill stocks to invest in. Major drug-makers who already have COVID-19 vaccines on the market were preferred for the list while those that have shown promise in early studies and trials for the pills are also selected.
The hedge sentiment around each stock was gauged using the data of 873 hedge funds tracked by Insider Monkey.
Best Covid Vaccine and Pill Stocks To Invest In
11. RedHill Biopharma Ltd. (NASDAQ:RDHL)
Number of Hedge Fund Holders: 4
In early October, RedHill Biopharma Ltd. (NASDAQ:RDHL) presented the results of a study into a new experimental drug, administered orally, for COVID-19 patients. The company, which operates from Israel, revealed that the drug reduced the risk of mortality in COVID-19 patients by up to 62% compared to a placebo. The share price of the firm jumped more than 6% after the results were announced.
In August, Cantor Fitzgerald analyst Brandon Folkes had initiated coverage of RedHill Biopharma Ltd. (NASDAQ:RDHL) stock with an Overweight rating and a price target of $22, noting that the firm was working on several interesting drugs, including two COVID-19 ones.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm ARK Investment Management is a leading shareholder in RedHill Biopharma Ltd. (NASDAQ:RDHL) with 787,469 shares worth more than $5.4 million.
10. Sanofi (NASDAQ:SNY)
Number of Hedge Fund Holders: 16
HSBC analyst Steve McGarry recently upgraded Sanofi (NASDAQ:SNY) stock to Buy from Hold and raised the price target to EUR100 from EUR89, underlining that the third quarter results of the firm showed increased operating leverage. The company recently shared positive topline results from a trial of Dupixent, a drug for patients with eosinophilic esophagitis. Bank of America claims the new drug presents a $1 billion sales opportunity for the firm.
In late September, Sanofi (NASDAQ:SNY) had announced that it would be focusing COVID-19 vaccine efforts on a recombinant vaccine candidate after initial studies. The firm is developing the vaccine in partnership with GlaxoSmithKline.
At the end of the second quarter of 2021, 16 hedge funds in the database of Insider Monkey held stakes worth $1.2 billion in Sanofi (NASDAQ:SNY), up from 15 the preceding quarter worth $1.1 billion.
In its Q4 2020 investor letter, Artisan Partners Limited Partnership, an asset management firm, highlighted a few stocks and Sanofi (NASDAQ:SNY) was one of them. Here is what the fund said:
“Top detractors in Q4 included Sanofi. This defensive security was out of favor as vaccine distribution started in earnest and the market shifted focus to a post-COVID world. Sanofi performed about in line with other global pharmaceuticals companies. We believe Sanofi’s management team will have success improving the pipeline and managing costs through restructuring. For perspective, Swedish Match was down ~4% in the quarter but provided a 54% total return for 2020.”
9. Atea Pharmaceuticals, Inc. (NASDAQ:AVIR)
Number of Hedge Fund Holders: 17
Atea Pharmaceuticals, Inc. (NASDAQ:AVIR) stock has rallied in the past few weeks on the back of positive initial data of a COVID-19 pill developed by drug giant Merck in partnership with Ridgeback Biotherapeutics. Although the oral COVID-19 treatment being developed by Atea Pharma along with Roche Holding AG did not meet the main goal in a recent trial, a senior executive at the firm said multiple parallel studies were ongoing to improve the treatment.
At the end of the second quarter of 2021, 17 hedge funds in the database of Insider Monkey held stakes worth $375 million in Atea Pharmaceuticals, Inc. (NASDAQ:AVIR), up from 13 in the preceding quarter worth $1.2 billion.
8. BioNTech SE (NASDAQ:BNTX)
Number of Hedge Fund Holders: 20
BioNTech SE (NASDAQ:BNTX) was one of the first companies to develop the COVID-19 vaccine and that product, after being administered to hundreds of millions of adults, has also been approved for children in the US aged 5-11 years-old. The company, which recently provided the US government with 50 million vaccines for children, also has a contract with the government to donate 1 billion doses to developing countries.
Despite these not-for-profit initiatives, BioNTech SE (NASDAQ:BNTX) has managed to beat market expectations on earnings. In the second quarter, the firm reported a revenue of €5.3 billion, up 12633% year-on-year and beating estimates by €2 billion.
At the end of the second quarter of 2021, 20 hedge funds in the database of Insider Monkey held stakes worth $579 million in BioNTech SE (NASDAQ:BNTX), up from 18 the preceding quarter worth $172 million.
In its Q2 2021 investor letter, Artisan Partners Limited Partnership, an asset management firm, highlighted a few stocks and BioNTech SE (NASDAQ:BNTX) was one of them. Here is what the fund said:
“Among our top contributors as BioNTech. Shares of BioNTech doubled in Q2 as the scientific and commercial success of the company’s highly effective COVID-19 mRNA vaccine came into sharper focus. The emergence of mRNA vaccines—which instruct cells to make a protein to trigger an immune response instead of putting a weakened or inactivated germ into our bodies—from BioNTech, Pfizer and Moderna have proven instrumental in combatting the COVID-19 pandemic. The companies’ compelling clinical data have made mRNA vaccines the preferred shots globally, prompting BioNTech and its partner Pfizer to expand manufacturing capacity rapidly to keep up with demand. The company now expects to be able to supply up to three billion doses in 2021, a remarkable achievement.
While we have long admired BioNTech’s management, technology platform and deep pipeline of novel cancer therapies, the dramatic stock price increase in Q2 causes some challenges. On one hand, the company is now in an incredibly strong financial position—profits from COVID-19 vaccines will likely give BioNTech massive cash reserves with which to invest aggressively in the broader potential of mRNA therapeutics. On the other hand, we can expect COVID-19 sales to decline sharply longer term, though the shape of this curve is up for debate based on how often booster shots will be needed. We are being prudent in our effort to appraise and value the windfall of profits over the intermediate term while balancing the potential for declining profits for several years post-pandemic (even if the company’s cancer pipeline progresses nicely). We have trimmed our position size to manage this risk accordingly.”
7. Novavax, Inc. (NASDAQ:NVAX)
Number of Hedge Fund Holders: 37
Novavax, Inc. (NASDAQ:NVAX) shares have soared as authorities in Indonesia allow for the emergency use of the Novavax COVID-19 vaccine. Novavax is developing and selling the vaccine in partnership with the Serum Institute of India. The vaccine is being sold under the name COVOVAX. The firm is also pursuing the marketing of a COVID-19 vaccine in Canada, according to reports, and has completed submissions in this regard.
A protein-based vaccine for COVID-19 treatment, developed by Novavax, Inc. (NASDAQ:NVAX), could also start selling in Australia. The company has filed provisional paperwork for the approval.
At the end of the second quarter of 2021, 37 hedge funds in the database of Insider Monkey held stakes worth 1.1 billion in Novavax, Inc. (NASDAQ:NVAX), down from 38 in the previous quarter worth $1.2 billion.
6. Moderna, Inc. (NASDAQ:MRNA)
Number of Hedge Fund Holders: 37
As adult populations around the world undergo COVID-19 vaccinations, the focus is now shifting towards children. Moderna, Inc. (NASDAQ:MRNA) recently announced that authorities in the United States are unlikely to complete the review of a COVID-19 vaccine for adolescents, developed by the firm, by the end of this year. The firm said it will wait for the review to be complete before filing for emergency use authorization.
Moderna, Inc. (NASDAQ:MRNA) recently also revealed that it would be doubling vaccine deliveries in the second quarter of 2022 through the COVAX facility. The facility could produce up to 500 million doses of the vaccine through to 2022.
At the end of the second quarter of 2021, 37 hedge funds in the database of Insider Monkey held stakes worth $5.7 billion in Moderna, Inc. (NASDAQ:MRNA), down from 39 in the preceding quarter worth $1.6 billion.
In addition to Merck & Co., Inc. (NYSE:MRK), Pfizer Inc. (NYSE:PFE), and Johnson & Johnson (NYSE:JNJ), Moderna, Inc. (NASDAQ:MRNA) is one of the stocks that hedge funds are buying.
In its Q2 2021 investor letter, Baillie Gifford, an asset management firm, highlighted a few stocks and Moderna, Inc. (NASDAQ:MRNA) was one of them. Here is what the fund said:
“Among the top contributors to Fund performance in the second quarter was Moderna. Moderna has just reported its first profitable quarter in the company’s history – net income for the most recent quarter was $1.2 billion. It reported revenue of $1.9 billion, an impressive increase compared to $8 million a year ago, driven by the sales of its Covid-19 vaccine. Moderna is expecting to deliver up to 1 billion vaccine doses in 2021 and is in discussions to increase global supply to governments around the world. Our long-term focus remains on the transformational potential of Moderna’s technology and its ability to address different diseases.”
5. Gilead Sciences, Inc. (NASDAQ:GILD)
Number of Hedge Fund Holders: 54
Gilead Sciences, Inc. (NASDAQ:GILD) recently posted earnings for the third quarter, reporting earnings per share of $2.65, beating estimates by $0.87. The revenue over the period was $7.4 billion, up 13% year-on-year and beating predictions by $1 billion. A few weeks before the results, the company had obtained regulatory approval of a new drug for the treatment of HIV patients. The firm has also inked an agreement with drug giant Merck for collaboration on a breast cancer treatment.
On October 19, investment advisory Cowen initiated coverage of Gilead Sciences, Inc. (NASDAQ:GILD) stock with an Outperform rating. BMO Capital also has a positive outlook on the company.
At the end of the second quarter of 2021, 54 hedge funds in the database of Insider Monkey held stakes worth $1.7 billion in Gilead Sciences, Inc. (NASDAQ:GILD), down from 65 in the previous quarter worth $2.6 billion.
In its Q3 2020 investor letter, Nelson Roberts Investment Advisors, an asset management firm, highlighted a few stocks and Gilead Sciences, Inc. (NASDAQ:GILD) was one of them. Here is what the fund said:
“In the healthcare sector, we sold our position in Gilead (NASDAQ: GILD) as there are no near or medium-term growth drivers for the company. Its popular HIV drug, Truvada, is going off patent this year. Additionally, UnitedHealth Group said it would not cover Gilead’s other HIV drug, Descovy. Lastly, the multiple acquisitions that Gilead has made recently are not ready for prime time, and it will likely be two years or more before any of Gilead’s new drugs have a meaningful impact on revenue.”
4. Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders: 64
Eli Lilly and Company (NYSE:LLY) is among the few drug giants that do not market the COVID-19 vaccine. However, the company has instead worked on other treatments for the virus. Although the firm narrowly missed market estimates on earnings per share in the third quarter, it beat them on revenue and improved guidance for the months ahead, resulting in positive coverage from analysts.
Berenberg analyst Kerry Holford recently upgraded Eli Lilly and Company (NYSE:LLY) stock to Buy from Hold and increased the price target to $270 from $240, noting that the estimates for the long-term sales growth of the firm looked favorable compared to peers.
Among the hedge funds being tracked by Insider Monkey, Florida-based investment firm GQG Partners is a leading shareholder in Eli Lilly and Company (NYSE:LLY) with 1.7 million shares worth more than $391 million.
In its Q1 2020 investor letter, Amana Mutual Funds Trust highlighted a few stocks and Eli Lilly and Company (NYSE:LLY) was one of them. Here is what the fund said:
“Even so, Lilly stood out as one, among a handful, of companies that registered a positive return for the first quarter. In January, Lilly reported excellent fourth quarter results, with revenue growing at a faster clip than over the first three quarters of the year. Lilly is also financially strong with debt equivalent to only two times EBITDA3 and 12% of market capitalization. Johnson & Johnson, while trailing Lilly, shares many of the same characteristics and also outperformed.”
3. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 67
Pfizer Inc. (NYSE:PFE) develops and sells perhaps the most famous COVID-19 vaccine around the world. The vaccine was recently approved for children aged 5-11 years-old as well. The company has a market cap of more than $245 billion. Authorities in the European Union recently approved the use of a simpler regimen for Vocabria, a drug developed by the firm along with GlaxoSmithKline, in treatment of HIV patients.
Morgan Stanley analyst Matthew Harrison recently maintained an Equal Weight rating on Pfizer Inc. (NYSE:PFE) stock and raised the price target to $48 from $45, noting the broader adoption of the COVID-19 vaccine of the firm.
At the end of the second quarter of 2021, 67 hedge funds in the database of Insider Monkey held stakes worth $2.3 billion in Pfizer Inc. (NYSE:PFE), up from 65 in the preceding quarter worth $2 billion.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Pfizer Inc. (NYSE:PFE) was one of them. Here is what the fund said:
“Our underweights in health care and staples contributed to relative performance during the period. As we continue to focus the portfolio on high-conviction ideas, we sold Pfizer in late 2020, in the health care sector.”
2. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 79
Merck & Co., Inc. (NYSE:MRK) is a New Jersey-based healthcare company. It has a market cap of more than $222 billion and is one of the biggest pharma stocks in the United States. The stock has been rallying recently and touched a 52-week high late last month on the back of reports that the company had developed a COVID-19 pill. It also recently beat market expectations on earnings per share and revenue in the third quarter results.
Analysts have been upgrading Merck & Co., Inc. (NYSE:MRK) stock on these positive catalysts. Argus and SVB Leerink are both positive on the long-term outlook of the firm, with Buy and Outperform ratings respectively.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Merck & Co., Inc. (NYSE:MRK) with 10.3 million shares worth more than $802 million.
In its Q1 2021 investor letter, Artisan Partners highlighted a few stocks and Merck & Co., Inc. (NYSE:MRK) was one of them. Here is what the fund said:
“In Q1, we initiated a position in Merck, a provider of health care solutions including prescription medicines, vaccines, biologic therapies, animal health and consumer care products. We purchased Merck when the stock came under pressure in part on concerns that the newly minted Biden administration could implement regulatory changes and lower drug costs in the pharmaceutical industry. Recent, but anticipated changes to Merck’s management team have also weighed on shares, as have concerns over the company’s heavy reliance on immunotherapy treatment Keytruda. Notably, Merck is not getting much credit from investors for the 60+ programs it has in clinical development, despite having several solid and large new product opportunities. Additionally, the company’s strong balance sheet and robust free cash flow provide it multiple options for future partnerships and acquisitions. While Merck is undergoing a period of transition, we think the company’s fundamentals are strong and believe changes to management should be a catalyst for improvement.”
1. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 88
Johnson & Johnson (NYSE:JNJ) makes and sells a variety of healthcare products. It is one of the most reliable businesses in the world with an impressive history of dividend payouts that stretches back decades. On October 21, the company declared a quarterly dividend of $1.06 per share, in line with previous. The forward yield was 2.6%. In the third quarter earnings, the firm beat market expectations on earnings per share by $0.25.
The company also boosted guidance for the fiscal year following the quarterly earnings beat. Johnson & Johnson (NYSE:JNJ) recently obtained regulatory approval for COVID-19 vaccine booster shots.
At the end of the second quarter of 2021, 88 hedge funds in the database of Insider Monkey held stakes worth $7 billion in Johnson & Johnson (NYSE:JNJ), up from 81 in the previous quarter worth $6.9 billion.
