Headquartered in Cambridge, the United Kingdom, AstraZeneca PLC (AZN) is a well-known biopharmaceutical company that discovers, develops, manufactures, and commercializes prescription medicines in several areas, including oncology, cardiovascular, and gastroenterology. The company is expected to seek full FDA approval of its COVID-19 vaccine by year’s end.
Massachusetts-based Moderna, Inc. (MRNA) develops transformative medicines based on messenger ribonucleic acid (mRNA). With its EUA from the U.S. FDA for its COVID-19 vaccine in hand, the company recently announced its plans to expand the size of clinical trial testing of its COVID-19 vaccine in children aged between five and 11 years.
Because the highly contagious Delta variant continues to spread at an alarming pace, COVID-19 vaccine stocks are again coming into focus with investors. According to CDC data, 70% of adults in the U.S. have received at least one dose of COVID-19 vaccine. However, with the spread of the Delta variant, the United States could see 140,000 new cases per day by the end of this month. And because most countries are seeking achieve herd immunity as soon as possible, both AZN and MRNA should benefit.
AZN has gained 15.3% year-to-date, while MRNA returned 267%. Also, MRNA’s 133% gains over the past six months are significantly higher than AZN’s 15.3%. Furthermore, in terms of the past three months’ performance, MRNA is the clear winner with 107.8% gains versus AZN’s 7.4%.
AZN is one of the stocks currently in the POWR Charts trading alert service based upon Christian Tharp’s 5 WINNING Stock Chart Patterns)
But which of these two stocks is a better buy now? Let’s find out.
AZN announced on August 2 that its SAPHNELO had been approved by the U.S. FDA to treat adult patients with moderate to severe systemic lupus erythematosus (SLE) who are receiving standard therapy.
The company’s BYDUREON Bcise, a once-weekly injectable suspension, was also approved by the U.S. FDA last month to treat type 2 diabetes (T2D) and improve glycemic control in pediatric patients as an adjunct to diet and exercise.
On August 3, the U.S. FDA granted Fast Track designation for MRNA’s mRNA-1345, its investigational single-dose mRNA vaccine used against the respiratory syncytial virus (RSV) in adults older than 60 years of age.
Also, the company announced a new supply agreement with Taiwan on July 22 for 20 million doses of its COVID-19 vaccine and its updated variant booster vaccine candidate, if authorized.
Recent Financial Results
For the second quarter, ended June 30, 2021, AZN’s revenue increased 31% year-over-year to $8.22 billion, while its product sales increased 33% year-over-year to $8.05 billion. Excluding the contribution from its COVID-19 vaccine, its revenue increased 17% year-over-year to $7.33 billion. In addition, the company’s total assets for the quarter came in at $73.64 billion, representing a 22.9% year-over-year rise.
MRNA is expected to release its second-quarter earnings results on August 5. The company’s total revenue for the first quarter ended March 31, 2021, was $1.94 billion, versus $8 million in the prior-year quarter. A total of 102 million vaccine doses were recognized as revenue. Its net income came in at $1.22 billion compared to a $124 million loss in the year-ago period. Its total assets were $12.69 billion, up 73% year-over-year.
Past and Expected Financial Performance
AZN’s revenue has grown at a 9.7% CAGR over the past three years. Analysts expect its revenue to increase 21.7% in the current year and 17.3% next year. The company’s EPS is expected to increase 65.7% in its fiscal year 2021 and 25.5% in fiscal 2022. And its EPS is expected to grow at a 19% rate per annum over the next five years.
In comparison, MRNA’s revenue grew at a 139.4% CAGR over the past three years. The company’s revenue is expected to increase by 2,180.2% in its fiscal year 2021 but decline 16.2% in fiscal 2022. Also, MRNA’s EPS is expected to grow by 1,353.6% in its fiscal year 2021 but fall 25.9% in fiscal 2022. Its EPS is expected to grow at a 16.8% rate per annum over the next five years.
AZN’s $29.53 billion trailing-12-month revenue is much higher than MRNA’s $2.73 billion. AZN is also more profitable, with a 76.69% gross profit margin compared to MRNA’s 32.03%.
Also, AZN’s ROE and Asset Turnover of 25.68% and 0.44, respectively, compare with MRNA’s 21.83% and 0.37.
In terms of forward EV/Sales, MRNA is currently trading at 6.89x, which is 25% higher than AZN’s 5.51x. Also, MRNA’s 15.05x forward non-GAAP P/E is 36.2% higher than AZN’s 11.05x.
So, AZN is the more affordable stock.
AZN has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. In comparison, MRNA has an overall C rating, which translates to Neutral. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.
Both AZN and MRNA have B grades for Growth, which is in sync with analysts’ expectations that their revenue and EPS will grow significantly this year.
AZN has a B grade for Quality, which is consistent with its 22.08% trailing-12-month EBITDA margin, which is 319% higher than the 5.27% industry average. MRNA also has a B grade for Quality, which is in sync with its 24.63% trailing-12-month EBITDA margin, which is higher than the 5.27% industry average.
AZN has a B grade for Stability also, in keeping with its 0.24 beta. However, MRNA has an F grade for Stability, consistent with its 1.47 beta.
With the COVID-19 Delta variant wreaking havoc, COVID-19 vaccine stocks AZN and MRNA are back in the spotlight. Even though MRNA’s vaccine already has an EUA from the FDA, it was recently discovered that two doses of AZN’s vaccine were 67% effective against the Delta variant, up from 60% initially reported. So, while AZN and MRNA are expected to gain significantly this year, we think it is wise to bet on AZN now because of its lower valuation, higher profitability, and better growth prospects.
Our research shows that odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the other top-rated stocks in the Medical – Pharmaceuticals industry here. Also, click here to see all the top-rated stocks in the Biotech industry.
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AZN shares fell $0.19 (-0.33%) in premarket trading Wednesday. Year-to-date, AZN has gained 17.20%, versus a 18.33% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...
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