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Is CureVac a Buy on the Pullback? It Depends

Pandemic vaccine plays have cooled off as of late. And that includes recent IPO CureVac (NASDAQ:CVAC). After going public last month at $16 per share, CureVac stock soared to prices topping $85 per share. But, in the past few weeks, as investors reassess upside potential, shares have pulled back, and now trade around $56 per share.

CureVac Stock
Source: rafapress /

The question is, “should you buy the pullback?” There are scores of vaccine contenders in this horse race. Some, like Moderna (NASDAQ:MRNA) remain the front-runners. Others, like iBio (NYSEAMERICAN:IBIO) and Inovio (NASDAQ:INO) have fallen fast behind.

But CureVac? While not the strongest vaccine play out there, it does have its merits. Namely, the German-based company could have an edge when it comes to inking vaccine deals with European governments. Given that its likely multiple contenders will wind up selling vaccines in the global market, there’s room for this company to succeed.

Yet, despite stronger prospects than many smaller vaccine plays, this remains a high-risk opportunity. With so much contingent on the company bringing a vaccine to market, shares will crater if it fails.

So, what’s the play? Shares may be a great buy on the recent pullback – but tread carefully. For those interesting in high-risk plays, there’s opportunity. But, otherwise, hold off for now.

CureVac Stock and Vaccine Success Odds

Given that Moderna, AstraZeneca (NYSE:AZN), and Pfizer (NYSE:PFE) are much further down the pipeline when it comes to a vaccine candidate, what are the odds for this company?

Not as bad as they seem at first glance. As I discussed above, CureVac may have a shot at securing vaccine deals in its home turf of Europe. In fact, deals are in motion. As InvestorPlace’s Mark Hake wrote Aug. 26, the company is in advanced talks to sell 225 million doses to the European Commission. This proposed deal could also include a follow-on order of 180 million does.

Multiply that by what rivals may charge for their vaccines, and that looks like big money, right? Well, unlike its rivals, this company plans to sell its vaccine (if approved) for between $3-$4 per dose. Yet, as Hake calculated, this could still mean billions in recurring revenue. Based on his numbers, shares could more than triple if it all works out.

But, will it all work out? Possibly. European governments may prefer to go with a German provider than an American-based one. And, developing countries may prefer CureVac’s low-cost option to what could be more expensive offerings from the main contenders.

However, don’t take this to mean success is a slam-dunk. For one, the company won’t wrap up clinical trials under the fourth quarter of 2020. By that time, the front-runner candidates may already have regulatory approval.

Secondly, does today’s valuation take into account how the company plans to price its doses much lower than the competition? Low-dose prices may help CureVac secure more deals. But, investors may be plugging in levels of profitability that aren’t possible unless the company sells its vaccine at prices on par with the others.

What Else is on the Table?

As I’ve discussed with other vaccine plays, I like to look at whatever non-pandemic catalysts are in the pipeline. In a worst-case scenario, other treatments/vaccines in development could help minimize downside if the coronavirus catalyst falls short.

So, what’s the case here with CureVac stock? Yes, the company has some other coals in the fire. As this commentator noted, along with its pandemic candidate, the company has three other mRNA candidates in Phase 1 testing. These consist of two cancer immunotherapies, along with a rabies vaccine.

But, while this portfolio of candidates shows some promise, it doesn’t hold a candle to Moderna’s mRNA pipeline. The better-known pandemic play has much stronger candidates outside of coronavirus that could help minimize downside if its virus catalyst falls short.

With this in mind, CureVac has more room to fall if its pandemic catalyst crashes and burns. If this happens, the stock will likely tumble toward its IPO price. In other words, a material amount of downside.

Should You Buy, Sell, or Hold? It Depends

What’s the bottom line with CureVac? Are shares a buy? A sell? A stay-on-the-sidelines situation?

It depends. If you have a high-risk appetite, and are looking to wager on pandemic stocks post-dip, give this name a look. It’s not as strong a contender as Moderna, but it’s leaps and bounds ahead of also-rans like iBio and Inovio.

However, if you are a more cautious investor, it may pay to take a wait-and-see approach with CureVac stock. Shares could fall to a better entry point in the next few months. But, for now, shares still price-in much of the upside.

On the date of publication, Thomas Niel did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Thomas Niel, contributor to InvestorPlace, has written single-stock analysis since 2016. 

Article printed from InvestorPlace Media,

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