Some heavy-hitter Wall Street firms say investors may want to briefly stop sweating over whether President Trump or Former Vice President Joe Biden wins the White House in November and have their portfolios ready for a month of positive news on pharma’s war against COVID-19.
Because that’s the true market catalyst headed into 2021, the white-glove investment banks say.
“We believe the recovery is intact, and think Phase 3 vaccine data in November could be a catalyst for the market to discount a reopening in 2021,” wrote Morgan Stanley strategist Adam Virgadamo in a new note to clients. Virgadamo points to research out of Morgan Stanley’s biotech team that calls for positive efficacy data from three leading vaccine candidates in November as the prime reason for his bullish stance.
There are 11 COVID-19 vaccines currently in Phase 3 trials around the world, according to New York Times data. Moderna and Pfizer are generally viewed as being among the U.S. companies furthest along in developing a COVID-19 vaccine.
Pfizer said in September it will seek regulatory review for its two-shot coronavirus vaccine in late October. Moderna CEO Stéphane Bancel said earlier this month at a Financial Times conference that Nov. 25 will be the earliest it will seek emergency use authorization for its two-shot vaccine candidate.
From those vaccine approval points, strategists like Virgadamo believe an aggressive ramp in distribution of COVID-19 vaccines will help swiftly reopen economies globally and power the stock market even higher beyond November.
Already, notes Virgadamo, the U.S. government under Operation Warp Speed has purchased 100 million vaccine doses from Pfizer (option for 500 million more), 100 million from Moderna (option for 400 million more), 100 million from Astrazeneca (option for 300 million more), 100 million from Sanofi (option for 500 million more) and 100 million Novavax.
To prepare for the 2021 vaccine-fueled economic recovery trade, Morgan Stanley recommends 40 stocks it views as currently ‘mis-priced.’ The list is a who’s who of companies that have been battered this year by plunging demand from COVID-19. Some well-known names on the list that caught Yahoo Finance’s attention include Coca-Cola, Bloomin’ Brands, Booking Holdings, Capri Holdings, Darden Restaurants, Delta Airlines, ExxonMobil, General Motors, Hilton, JetBlue, Marriott, and Urban Outfitters.
Morgan Stanley is joined by rival Goldman Sachs in suggesting investors be ready soon for favorable vaccine news in coming weeks.
“The vaccine represents a more important factor than the election result for the path of equities,” opines Goldman Sachs strategist David Kostin. But unlike Morgan Stanley, Goldman’s Kostin is also keen on how COVID-19 therapeutics could help do their part to jumpstart the global economy and serve as a catalyst to markets.
Says Kostin, “Aside from the vaccine, therapeutic antibodies from Eli Lilly and Regeneron have demonstrated a benefit on hospitalizations/ER visits in early studies, offering a potential bridge to broader availability of vaccines, a dynamic potentially under-appreciated by investors.”
Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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