Should You Invest in Pfizer or BioNTech as a Vaccine Play?

After their joint coronavirus vaccine trial got encouragingly high marks, what's the better investment?

Pfizer logo on building

Not surprisingly, the stock market reacted very positively to the most encouraging news yet of a COVID-19 vaccine. Pfizer (PFE) and German biotech company BioNTech (BNTX) reported 90% efficacy in their coronavirus vaccine trial that included 43,538 participants. Shares of the two companies involved skyrocketed right away. But which is the better buy: Pfizer or BioNTech stock?

Let’s put aside the matter of whether Pfizer and BioNTech’s prospective vaccine actually becomes the first one to market. Former FDA commissioner Scott Gottlieb told CNBC that the vaccine could be available on a limited basis by December, and widely available by the third quarter of 2021. But that still amounts to speculation, despite the very strong trial results. The who and when of things remains unknown.

So let’s stick to the knowns. What we know is how each company looks from a fundamental and technical standpoint. Sticking strictly to those knowns, let’s break down which looks like the better buy: Pfizer stock or BioNTech stock.

Pfizer vs. BioNTech Stock: Tale of the Tape

Trailing P/Es: PFE 23, BNTX N/A

Forward P/Es: PFE 11, BNTX 14

Latest earnings growth: PFE -71.4%, BNTX N/A

Latest sales growth: PFE -4.3%, BNTX 58.8%

Cash per share: PFE $2.05, BNTX N/A

Institutional ownership: PFE 71%, BNTX 12%

As you can see, this is a bit of an apples-to-oranges comparison from a fundamental perspective. Pfizer is the much larger company, whose $215 billion market cap is nearly 10 times BioNTech’s ($24.2 billion). Pfizer did $51.75 billion in sales in 2019. BioNTech brought in a mere $121.6 million. Meanwhile, Pfizer earned $2.92 per share in 2019 BioNTech has never been close to profitability.

That said, BioNTech is getting closer, and its sales are growing fast while Pfizer’s have actually slipped. And BioNTech’s revenue growth is expected to accelerate greatly in the coming quarters, with analysts projecting 99% growth in the third quarter (earnings are due out this week), 1,186% in the fourth quarter, and 341% for the year. And those estimates were before the coronavirus vaccine news came out.

Pfizer is expected to return to top-line growth too, but minimally by comparison: 9.2% in the first quarter of 2021.

In addition, Pfizer already had Wall Street’s full attention, with institutional ownership at 71%. BioNTech stock is a relative unknown, with institutional ownership at a mere 12%. That’s likely to change now that BioNTech is part of the most effective COVID-19 vaccine trial to date.

Comparing the Charts
While BioNTech stock has far more room to grow in theory than Pfizer, especially should their vaccine come to fruition, how have the two stocks actually been performing? Let’s take a look.

Here’s Pfizer’s year-to-date chart:

BFE-120820

That’s pretty up-and-down. Pfizer shares are now narrowly in positive territory (1.1%) for the year. That’s not very impressive when you consider that healthcare stocks as a group are up 8.6% year to date.

Now let’s look at the chart of BNTX stock, which is an American Depositary Receipt (ADR) that trades on the Nasdaq:

BNTX-120820

That’s quite a difference! BioNTech stock is up more than 200% this year. From a pure momentum perspective, this is a no-brainer: BNTX is the far better growth stock.

Ultimately, this may come down to investing preference. If you’d prefer the safety of a reliable dividend stock with plenty of history, then Pfizer is probably the better bet. Its 4.2% yield is attractive, and vaccine news may be just the thing to give its share price a jolt.

But if it’s growth you seek, BNTX is the easy pick. It has way more momentum, higher upside, and superior sales growth. Sure, with no dividend and no earnings, it’s more of a risk, particularly if its coronavirus vaccine trial hits an unexpected dead end. But the upside is too hard to pass up right now.

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