New York City-based Pfizer Inc. (PFE - Get Rating) develops, manufactures, markets, distributes, and sells biopharmaceutical products worldwide. In addition, the company offers medicines and vaccines in various therapeutic areas. In comparison, Cambridge, Mass.-based Moderna, Inc. (MRNA - Get Rating) is a biotechnology company that develops therapeutics and vaccines based on messenger RNA to treat infectious diseases, immuno-oncology, rare diseases, cardiovascular diseases, and auto-immune diseases.

The biotech and pharma industry thrived amid the COVID-19 pandemic due to substantial capital investments to develop vaccines and therapies for the virus. The industry is expected to remain in focus in the coming months because of the rapid spread of the virus’ Delta variant in several parts of the world. According to a new report by Grand View Research, the global biotechnology market is expected to expand at a 15.83% CAGR from 2021 – 2028. So, both MRNA and PFE are well-positioned to continue benefiting from the industry tailwinds.

MRNA has gained 110.1% over the past six months, while PFE has returned 34.5% over the period. Also, MRNA’s 268.8% gains year-to-date compare with PFE’s 25.8% returns. Furthermore, MRNA is the clear winner with 458.7% gains versus PFE’s 22.6% in terms of the past year’s performance.

But which stock is a better buy now? Let’s find out.

Note that PFE is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Growth portfolio. Learn more here.

Click here to checkout our Healthcare Sector Report for 2021

Latest Developments

On July 23, PFE and BioNTech SE (BNTX) announced that the U.S. government had purchased an additional 200 million doses of the Pfizer-BioNTech COVID-19 Vaccine. These doses are expected to be delivered from October 2021 through April 2022. This should deliver to the company  a continuous stream of revenue over the period.

On August 9, MRNA announced that the Therapeutic Goods Administration (TGA) had granted provisional registration to the COVID-19 Vaccine Moderna in Australia for active immunization. This demonstrates the company’s overseas reach and wide demand for its vaccines.

Recent Financials

MRNA’s total revenues increased 6,398.5% year-over-year to $4.35 billion in its fiscal second quarter, ended June 30. Its income from operations stood at $3.06 billion, up 2,609.8% from the same period last year. Its net income improved 2,476.1% from its  year-ago value to $2.78 billion. The company’s EPS increased 2,183.9% year-over-year to $6.46.

PFE’s revenues increased 92% year-over-year to $18.98 billion in its  fiscal second quarter, ended July 4. Its income from continuing operations grew 113.7% from its year-ago value to $5.57 billion, while its net income improved 59% year-over-year to $5.56 billion. The company’s adjusted EPS improved 73% year-over-year to $1.07.

Past and Expected Financial Performance

MRNA’s revenues have grown  at a 231.7% CAGR over the past three years. Analysts expect MRNA’s revenue to increase 7,189.7% in the current quarter and 2,180.2% in the current year. The company’s EPS is expected to grow 1,439% in the current quarter and 1,353.6% in the current year. Furthermore,  its EPS is expected to grow at a 16.8% rate per annum over the next five years.

In comparison,  PFE’s revenues grew at a 1.4% CAGR over the past three years. Analysts expect the company’s revenue to increase 62.7% in the current quarter and 73.7% in the current year. The company’s EPS is expected to grow 36.1% in the current quarter and 66.7% in the current year. Its  EPS is expected to grow at a 11.5% rate  per annum over the next five years.

Profitability

PFE’s trailing-12-months revenue is 7.9 times MRNA’s. Also, PFE is more profitable, with a 71.12% gross profit margin versus  MRNA’s 59.02%.

However, MRNA’s respective 72.43% and 45.77% ROE and ROTC  compare with PFE’s 14.03% and 8%.

Valuation

In terms of forward EV/Sales, MRNA is currently trading at 8.74x, which is 57.4% higher than PFE, which is currently trading at 3.72x. Also, MRNA’s 12.16 forward EV/EBITDA ratio  is 14.9% higher than PFE’s 10.35.

Thus, PFE is relatively more affordable here.

POWR Ratings

PFE has an overall A rating, which equates to Strong Buy in our proprietary POWR Ratings system. MRNA, in contrast,  has an overall B rating, which translates to Buy. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

PFE has a C grade for Stability, while MRNA has an F grade for Stability. PFE’s 0.67 beta value is in sync with its Stability grade. In contrast, MRNA has a 1.49 beta value, which is  consistent with its Stability grade. A beta value of less than one makes PFE a relatively stable investment compared to MRNA.

Both stocks have a B grade for Value. This is justified because  PFE’s 11.94 forward EV/EBIT ratio  is 41.2% lower than the 20.32 industry average, and in sync with its Value grade. In comparison, MRNA’s 12.48 EV/EBIT multiple is 38.6% lower than its industry average, and consistent with its grade.

Of the 217 stocks in the Medical – Pharmaceuticals industry, PFE is ranked #10. Alternatively, among the 503 stocks in the Biotech industry, MRNA is ranked #32.

Beyond what we’ve stated above, we have also rated the stocks for Growth, Momentum, Quality, and Sentiment. Click here to view PFE ratings. Also, get all MRNA ratings here.

The Winner

Both PFE and MRNA should benefit from the rising demand for vaccines. However, we think the relatively more stable and cheaper PFE stock seems to be a better choice here.

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 top-rated stocks in the Biotech industry here. Also, here to view the top-rated stocks in the Medical – Pharmaceuticals industry.

Click here to checkout our Healthcare Sector Report for 2021

PFE shares fell $0.09 (-0.19%) in after-hours trading Thursday. Year-to-date, PFE has gained 32.20%, versus a 19.83% rise in the benchmark S&P 500 index during the same period.

About the Author: Subhasree Kar

Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics. More...

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