3 Pharmaceutical Stocks to Buy in November

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pharmaceutical stocks - 3 Pharmaceutical Stocks to Buy in November

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Pharmaceutical stocks are in focus though fiscal year 2020. As companies rush to deliver a vaccine against the novel coronavirus pandemic, there are attractive investment opportunities.

Europe is already witnessing a second wave of coronavirus infections. In addition, a record number of cases were reported in several states in the United States. Attention has therefore shifted to a few companies that made significant progress in clinical trials.

This column will discuss three pharmaceutical stocks that are likely to deliver a vaccine in the coming months. In addition, a positive news flow is likely to continue for these companies. Therefore, these stocks can potentially trend higher.

Let’s discuss these three pharmaceutical stocks that are leading the race for a vaccine against Covid-19.

  • Pfizer (NYSE:PFE)
  • Moderna (NASDAQ:MRNA)
  • AstraZeneca (NASDAQ:AZN)

Pharmaceutical Stocks: Pfizer (PFE)

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I believe that PFE stock should top the list of pharmaceutical stocks to buy for November. If we look at the recent events, there have been interesting developments.

Last month, the company’s Chairman and CEO Albert Bourla wrote an open letter on the developments related to the Covid-19 vaccine. The CEO stressed the quality and safety standards undertaken by the company. In addition, Albert said that the company can apply for emergency use authorization (EAU) in the U.S. by the third week of November.

As I write, there are positive developments related to the first interim efficacy analysis of the large-scale Phase 2/3 clinical trial. The vaccine was shown to be more than 90% effective after the second dose.

This is a big trigger for the company and PFE stock is already higher by 5% in pre-market. With a second wave of coronavirus infections, the company is likely to get a EAU authorization later this month.

I want to add here that in the last year, PFE stock delivered negative returns of 3.2%. At a forward price-to-earnings-ratio of 12.6, the stock is undervalued. Given this news, I expect sustained upside momentum for the stock.

Moderna (MRNA)

The Moderna (MRNA) logo surrounded by syringes, pills and disposable face masks.
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MRNA also features in my list of top pharmaceutical stocks to buy for November. It’s important to note that MRNA stock is trading around the same level as in May 2020. After a initial big rally, the stock has been in a consolidation mode.

However, there are several positive developments for the company and renewed stock upside is imminent.

In October 2020, the company announced a supply agreement for the mRNA vaccine against Covid-19 with Japan and Qatar. The company already has a supply agreement with the U.S. government and the European Commission. It’s very likely that U.K will join the list in the coming months.

The company already reported positive data from interim Phase 2 studies. Enrollments are complete for the Phase 3 trial, which is expected to begin in fiscal year 2021. With a supply agreement with several countries, the company already has a deep backlog.

In the third quarter results for 2020, the company received $1.1 billion in customer deposits. Cash inflow is likely to continue in the coming quarters. While the Phase 3 trials begin in FY2021, I expect the stock to move after a long phase of consolidation.

AstraZeneca (AZN)

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AZN stock has also been relatively subdued, having moved higher by 11% for year-to-date FY2020. However, I believe that the stock is likely to move higher as the pharmaceutical company begins to deliver vaccines.

In May 2020, Britain had agreed to take 100 million doses of the vaccine, which is being developed by Oxford University and licensed to AstraZeneca. However, only 4 million shots are expected to be delivered this year. The target was to deliver 30 million doses of the vaccine by September 2020.

I don’t see that as a concern with AstraZeneca having a global supply chain that can churn 3 billion doses of the vaccine. The company has said in a written statement that it can “begin supplying hundreds of millions of doses on a rolling basis once it receives regulatory approval.”

At the same time, the company is launching Phase 3 trials for “treatment against COVID-19 for people who need an immediate defence or whose weaker immune systems mean they are less likely to benefit from a vaccine.”

Positive news on this front can act as another stock upside catalyst. Overall, I am bullish on AZN stock and it’s a good time to consider exposure.

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

Faisal Humayun is senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector. 

Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.


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