The pandemic seems far from over as many scientists and researchers predict a second wave of the deadly virus, particularly as the temperature drops in the coming months. Europe is already facing a new set of restrictions in order to flatten the curve. Similarly, the United States and many other countries are also likely to see a second wave that could have further consequences for the global economy as a whole.
However, some industries, such as technology and healthcare, have been significantly benefiting from changing consumer behavior due to the pandemic., This has positioned them to benefit even more if there is a second wave.
With the world eagerly waiting for good news on the vaccine front, and trying to adapt to the “new normal,” Johnson & Johnson (JNJ), Pfizer, Inc. (PFE), Zoom Video Communications, Inc. (ZM), and Abbott Laboratories (ABT) should see solid gains from a second wave.
Johnson & Johnson (JNJ)
A believer that good health is the foundation of vibrant lives, thriving communities, and forward progress, JNJ researches and develops, manufactures, and sells various products in the health-care field worldwide. The company derives its profitability from three segments: pharmaceuticals, medical devices, and consumer products. JNJ’s Covid-19 vaccine candidate is one of six coronavirus vaccines being tested in the United States, and one of the four in the Phase 3 stage. Its phase 3 trial started in September.
JNJ announced its financial results for the quarter that ended September 30 on October 13th. It reported sales of $21.1 billion, reflecting an overall and operational increase of 1.7%, and adjusted operational increase of 2.0% despite the estimated negative impact of the pandemic. JNJ’s EPS increased 101.5% year-over-year to $1.33. Analysts expect JNJ’s revenue to increase 4.3% year-over-year for the quarter ending December 2020 and 8.4% next year. The company’s EPS is expected to increase 12.8% next year, and at a rate of 4.3% per annum over the next five years. Moreover, JNJ has an impressive earnings surprise history with the company surpassing EPS estimates in each of the trailing four quarters.
Even though JNJ’s shares slumped after it paused its Covid-19 vaccine trial after a participant was experiencing ‘unexplained illness,’ researchers say such a pause is fairly common while conducting such trials. On October 1st, JNJ completed its acquisition of Momenta Pharmaceuticals, Inc. (MNTA), a company that discovers and develops novel therapies for immune-mediated diseases. The stock has gained 33.3% since hitting its 52-week low in March.
How does JNJ stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
A for Peer Grade
B for Industry Rank
A for Overall POWR Rating
The stock is also ranked #10 out of 240 stocks in the Medical – Pharmaceuticals industry.
Pfizer, Inc. (PFE)
PFE is one of the leading companies in the biotechnology and pharmaceutical industry. PFE’s stock had its IPO on January 1, 1986, making it an older stock than 92.89% of US equities in the StockNews.com universe. The company discovers, develops, manufactures, and sells healthcare products worldwide and operates through mainly three segments: Global Innovative Pharmaceutical (GIP), Global Vaccines, Oncology and Consumer Healthcare (VOC), and Global Established Pharmaceutical (GEP).
PFE and its partner BIONTECH SE (BNTX) are currently leading the race for a Covid-19 vaccine and could post initial final-phase data this week. Having received the approval from the FDA, it will be the first coronavirus vaccine trial to include children in the United States. The company reported 6% operational growth from Biopharma, primarily driven by Vyndaqel, Eliquis, Ibrance, Inlyta and Xtandi for the quarter that ended June 2020.
Analysts expect PFE’s revenue to increase 3.2% for the quarter ending December 2020 and 9.2% next year. The company’s EPS is expected to increase 9% for the quarter ending December 2020, 11.7% next year, and at a rate of 5.4% per annum over the next five years. Moreover, PFE’s earnings surprise history looks impressive with the company missing the consensus estimate in just one of the trailing four quarters. The stock has gained 29.4% since it hit its 52-week low in March.
PFE’s POWR Ratings reflect this promising outlook. It has an overall rating of “Buy” with an “A” for Trade Grade and Peer Grade, and a “B” for Buy & Hold Grade and Industry Rank. Among the 240 stocks in the Medical – Pharmaceuticals industry, it’s ranked #12.
Zoom Video Communications, Inc. (ZM)
Going public only last year, ZM has found its place among the masses especially with the world adapting to the “new normal.” It is primarily a company that provides cloud platforms for video, voice, content sharing, and chat, across mobile devices, desktops, telephones, and room systems. From various business holding meetings, to product briefs and launches to virtual classes being held, virtual gatherings taking place, ZM has been everywhere.
Interestingly, the new common phrase, “Let’s zoom at” could have been “Lets Saasbee at” because that is what the company was initially named in 2011 by the founder and CEO, Eric Yuan.
ZM reported revenue of $663.5 million, up 355% year-over-year, for the quarter that ended June 2020. It has 988 customers contributing more than $100,000 in trailing 12 months’ revenue, up approximately 112% from the same period last fiscal year. Analysts expect ZM’s revenue to increase 315.3% for the quarter ending October 2020 and 29.7% next year. The company’s EPS is expected to increase 744.4% for the quarter ending October 2020, 14.5% next year, and at a rate of 38.5% per annum over the next five years. Moreover, ZM has an impressive earnings history with the company surpassing EPS estimates in each of the trailing four quarters.
ZM has been monetizing from the “new normal” with people working and learning from home. It has set the stage for the launch of a series of new programs on Zoom Analyst Day termed ‘Zoomtopia.’ It will test a marketplace called OnZoom where anyone can promote and sell virtual events. ZM also unveiled a plan to turn itself into a platform for other apps named “Zapps” and create new end-to-end encryption (E2EE).
Having already partnered with Lumen Technologies Inc. (LUMN) in September, ZM is looking to cash in even more from a second Covid-19 wave. Even when the stock market crashed in mid-March, due to the deadly virus, ZM soared and the stock has now gained 648.5% year-to-date.
It’s no surprise that ZM is rated “Strong Buy” in our POWR Ratings system. It also has an “A” for Trade Grade, Peer Grade, and Buy & Hold Grade, and a “B” for Industry Rank. In the 54-stock Technology – Services industry, it is ranked #5.
Abbott Laboratories (ABT)
ABT manufactures and sells health care products worldwide with the aim to make the world a better place by bringing life changing health technologies. The company operates in four business segments: Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Vascular Products. It has been in business for over 130 years and has made an impact in over 160 countries.
ABT reported worldwide sales of $7.3 billion for the quarter that ended June 2020, driven by Diagnostics — including tremendous demand for the company’s COVID-19 tests — and strong growth in Diabetes Care and Nutrition. The company had 7.1% growth in diagnostics with molecular diagnostics having a standout quarter with 241.4% organic growth due to demand for the company’s lab-based molecular tests for COVID-19 on its m2000 and Alinity m platforms.
Analysts expect ABT’s revenue to increase 5.3% for the quarter that ended September 2020 and 13.3% next year. The company’s EPS is expected to increase 25.9% next year, and at a rate of 14.9% per annum over the next five years.
ABT launched the world’s first glucose sport biosensor designed for athletes called Libre Sense Glucose Sport Biosensor in September and took the continuous glucose monitoring (CGM) technology to the next level. It also launched the much-anticipated FreeStyle Libre 3 system featuring the world’s smallest, thinnest glucose sensor, and has received CE marks for people with diabetes in Europe. Moreover, ABT won the U.S. emergency use authorization for the new COVID-19 antibody test. The stock has gained 58.5% since hitting its 52-week low in March.
ABT’s strong fundamentals are reflected in its POWR Ratings, it has a “Strong Buy” rating with an “A” in Trade Grade, Buy & Hold Grade and Peer Grade, and a “B” in Industry Rank. Within the Medical – Pharmaceuticals industry, it’s ranked #1 out of 240 stocks.
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JNJ shares rose $0.29 (+0.20%) in after-hours trading Thursday. Year-to-date, JNJ has gained 2.93%, versus a 9.52% 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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