Forget Moderna! This is a stronger coronavirus stock

Pfizer, BioNTech , and Moderna (NASDAQ: MRNA) have seen their shares rise over the past few months as a result of their work to develop vaccines against COVID-19. Moderna, which started the year with a share price of $ 19.50 has seen its stock climb more than 608% year to date to $ 138.

CVS health (NYSE: CVS) This may not be the first company you think of when you think of “coronavirus” stock, but it will be the same in 2021, and unlike Moderna, it has long been profitable.

Hypodermic needles

Image source: Getty Images.

What comes for CVS?

The pharmacy and health benefits provider serves as a place where users can get their coronavirus vaccine, just as it currently serves those who need a COVID-19 diagnostic test. Both ventures drive additional traffic to the company’s stores.

In his third-quarter job call, Larry Merlo, the outgoing CEO and president of CVS, said 70% of those tested for COVID-19 at their outlets were not employees. -purchased previous CVS, and 40% of those tested at business sites in their Return Ready program did not return CVS customers. The management is confident that some of these people will return for more routine pharmaceutical and healthcare purposes – and that is going to help the company.

In addition, once the vaccine is more widely distributed and more people are protected against coronavirus infection, the CVS pharmacy and sales industry will pick up as more people return to regular doctor visits. That translates to more prescriptions being filled and more brick-and-mortar stores.

The company is cycling its first wave of vaccines

CVS and competitive pharmacy Walgreens Boots Federation (NASDAQ: WBA) has entered into contracts with the Centers for Disease Control (CDC) to become the official vaccine program providers for communities and to participate in the Pharmacy Partnership for Long-Term Care Program.

Long-term care facilities had the option of choosing which pharmacy they wanted to distribute the vaccine to staff and residents. CVS was selected with more than 40,000 resources, more than any other vaccine provider.

CVS said it will begin providing the Pfizer COVID-19 vaccine in nursing homes starting Dec. 21, and they have added that it is likely to be able to use the Moderna vaccine by Dec. 28. If all will go well, a candidate will receive a U.S. Food Moderna vaccine and a Drug Administration Agreement after a committee met today, Dec. 17, to discuss the vaccine test data. The FDA has stated in other documents ahead of Thursday’s panel that it was likely to grant Moderna’s applicant an emergency use permit, mRNA-1273.

CVS says it expects to vaccinate around 2 million people in long-term care facilities. For Pfizer or Moderna dual-dose vaccines, the company can charge Medicare $ 16.94 for each initial dose and then $ 23.39 for a second one, which would mean the company would stand up to $ 90 million in revenue just for participating in the program.

The publicity the company receives will also help, especially once the vaccine is available to the general public at more than 9,900 outlets. The company said it based in-house vaccines on an order-only model.

MRNA chart

MRNA data with YCharts

The company was already in a strong position

While COVID-19 has certainly had a detrimental effect on CVS ’core pharmaceutical industry, the company has done well this year because of their diverse revenue streams. There are three categories – pharmacy services, retail and healthcare benefits. Pharmacy services revenue was down 1% in the third quarter, but sales revenue was up 6.9% year-over-year and health care benefits revenue was up 8.8% year-over-year.

Over nine months, the company’s revenue was $ 199 billion, up 4% year-over-year. The company is on track for its 10th consecutive year of revenue growth and the second straight year of net revenue growth. It’s hard not to like a 12-month operating margin at CVS of 4.85%, which is above the average for a pharmacy company.

Look at it as a buying opportunity

Shares in CVS, despite what turns out to be a good year, are down nearly 7% year to date, while Moderna stock is up more than 600%. Both companies should succeed next year, but it is clear that CVS stock is the basis and payable for change, with a price-to-earnings (P / E) ratio of 11, compared to 82 for Walgreens. (Moderna does not have a P / E ratio, without conventional net income). The vaccine hoopla around Moderna, on the other hand, may have moved the stock up beyond a price it will be able to sustain, in the short term at least.