Coronavirus Pandemic – As New Frontrunners Emerge in Covid-19 Vaccine

 

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Though over two dozen companies are developing the Covid-19 vaccine, only ten companies are considered the frontrunners as they are already conducting the Phase-3, or at the very least, the Phase-2 trials.  

Among the ten, seven are well-established American and European multi-national corporations (MNCs). At the same time, the other three -- BioNTech (BNTX), Moderna (MRNA), and Novavax (NVAX) -- are mostly momentum companies, gaining significant notoriety in recent months for success in initial trials leading to this vaccine. To put the comparison in a proper perspective, let's compare the annual revenues: Johnson and Johnson's (JNJ) $80B vs. Novavax's $19M, Pfizer's (PFE) $51B vs. Moderna's (MRNA) $60M, and Merck's $47B vs. BioNTech's (BNTX) $122M. 

The only reason the momentum trio has been cited alongside the seven MNCs is their recent ascendence in the Covid-19 vaccine trials. Of course, BioNTech has been partnering with Pfizer, perhaps making it a much safer momentum player. 

As expected, the above correlation matrix shows how the trio shares high correlations among them but low to negative correlations with MNCs depending on the annual performance; for instance, while the trio has negative correlations with Glaxo and Eli Lilly, it has moderately high correlations with the better-performing MNCs like AstraZeneca, Pfizer, and Sanofi. 

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The momentum trio has registered significant gains this year: Novavax 589%, Moderna 201%, and BioNTech 100%. Among the MNCs, AstraZeneca's (AZN) 31% return is the highest, followed by Pfizer's 22% and Sanofi's (SNY) 19%. Glaxo's (GSK) 3% and Eli Lilly's (LLY) 4% are at the bottom. Most of the MNC gains have come in November as the investors are now betting on better-than-expected Phase-3 data.

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In the last two months (since 09/15), BioNTech (58%) and Moderna (34%) remain the two standout winners, while Novavax collapsed (-12%), leading to a negative correlation between Moderna and Novavax. MNCs have generated low to negative (+/-5%) returns, so their correlations remain elevated. Surprisingly, AstraZeneca's prior 0.23 correlation with Glaxo has now jumped to 0.90.

On the heels of last Monday's (11/9) great news from Pfizer, i.e., 90% effectiveness on Phase-3 trial, the market may see a new flight to quality, as investors rotate capital from the high-flying momentum stocks to the MNCs. 

Stay safe!

Data Source: Yahoo Finance and Macrotrends

Disclaimer: The author is not advocating any of the stocks listed here. Consult your Registered Rep, RIA, or Financial Planner for an appropriate asset allocation model and the suitability of stocks and other holdings for you.

-Sid Som

homequant@gmail.com

Coronavirus Pandemic – Frontrunners in Race to Develop Covid-19 Vaccine

While there are many players in the market mix to develop the Covid-19 vaccine, seven players have emerged as the frontline contenders. Of the seven, five are well-known pharmaceutical conglomerates:

• AstraZeneca (AZN)
• Johnson & Johnson (JNJ)
• Gilead Sciences (GILD)
• GlaxoSmithKline (GSK)
• Pfizer (PFE)

Despite having frontline status, their year-to-date (YTD) growth rates have been relatively subdued, ranging between -20% and +8%.

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On the other hand, until the recent breakout of the coronavirus pandemic, Moderna (MRNA) and Novavax (NVAX) were more or less unknown names. The reason these two stocks have become household names is their meteoric rise in such a short period. While Moderna's YTD growth has been an impressive 274%, Novavax has seen an astronomical increase of 2,354% (the stock price went from a mere 4.49 on 1/2/20 to 178.51 on 8/10/20), pulling back to 110 on 10/5/20.

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The above correlations matrix demonstrates how the market perceives their inter-relations. Since Novavax and Moderna have performed in lockstep, they share the highest correlation between them. They also have a relatively high correlation with AstraZeneca as the latter has returned a positive 8% growth YTD, but negative-to-low positive correlations with the other four stocks.

Conversely, Moderna and Novavax have negative correlations with Glaxo, as the latter has produced -20%, but have remained slightly negative to uncorrelated with Gilead, J&J, and Pfizer as these three name-brand stocks have more or less flatlined.  

Therefore, an aggressive growth fund will choose both Moderna and Novavax, a balanced fund will stick to two-to-three from the name brand five, and a value fund will perhaps prefer the three dogs from the mix.

Stay safe!

Data Source: Yahoo Finance

Disclaimer - The author is not advocating any of the stocks listed here. Consult your Registered Rep, RIA, or Financial Planner for an appropriate asset allocation model and the suitability of stocks and other holdings for you.

-Sid Som

homequant@gmail.com

Link to Sid's Books

Coronavirus Pandemic – How Nasdaq has Outperformed the Dow during the Pandemic

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Highlights...

1. The top graph demonstrates that after bottoming out on 3/23 at a closing price of 8,592, the Dow Jones Industrial Average (Dow) made an unexpectedly momentous reversal. While its growth started to taper between 6/10 and 7/10, it resumed its upward movement gradually. But it has yet to re-test its prior high of 29,551 set on 2/12. Nonetheless, the Dow has jumped 50% between 3/23 and 8/10.

2. The bottom graph shows that Nasdaq also hit bottom on 3/23 at a closing price of 6,861. However, unlike the Dow, it continued its majestic run, even far exceeding its prior all-time high of 9,817 set on 2/19 and recently eclipsing a short zenith of 11K. The trend has been a near-perfect 45-degree linear -- an impressive performance indeed. Between 3/23 and 8/10, Nasdaq has skyrocketed 60%, an even better feat than the Dow.

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3. The above scatter plot shows that Nasdaq had outperformed the Dow after the two indices started forking in mid-June when the Dow and Nasdaq were roughly 24,600 and 8,900, respectively. After the fork, the Dow began to taper while Nasdaq continued its eye-popping journey.

4. Generally, these two indices more or less move in tandem, but this fork -- resulting in two different slopes --was significant, leading to the low r-squared value. The slope of the Nasdaq index became exponential, while the Dow fell into a logarithmic model, slowly tilting down.

The market reversal after the historic fall in March was just terrific.

Stay safe!

Data Source: Yahoo Finance

-Sid Som
homequant@gmail.com

Link to Sid's Books

Coronavirus Pandemic – Front-running Market Players in Race to Develop Covid-19 Vaccine

While there are many players in the market mix to develop the Covid-19 vaccine, seven players have emerged as the frontline contenders. Of the seven, five are well-known pharmaceutical conglomerates: AstraZeneca (AZN), Johnson & Johnson (JNJ), Gilead Sciences (GILD), GlaxoSmithKline (GSK), and Pfizer (PFE). Despite having frontline status, their year-to-date growth rates have been quite subdued, ranging between -13% and +10%.

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On the other hand, until the recent breakout of the coronavirus pandemic, Moderna (MRNA) and Novavax (NVAX) were more or less unknown names. The reason these two stocks have become household names is their meteoric rise in such a short period. While the year-to-date growth of Moderna has been an impressive 285%, Novavax has seen an astronomical growth of 3,693% (the stock price went from a mere $4.50 on 1/2/20 to $170.29 on 8/7/20).

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The above correlations matrix demonstrates how the market perceives their inter-relations. As expected, Novavax has a high correlation with Moderna, but negative-to-moderate correlations with the other five. 

Novavax has a moderately high correlation with AstraZeneca as the latter has returned 10% growth during this period. Conversely, Novavax has a negative correlation with Glaxo, as the latter has produced -13%, but has remained uncorrelated with Gilead, J&J, and Pfizer as these three name-brand stocks have flatlined.  

Moderna, being the other growth stock, has very similar correlations with its competitors.

An aggressive growth fund, therefore, will choose both Moderna and Novavax, a balanced fund will stick to two-to-three from the name brand five, and a value fund will perhaps prefer the three dogs from the mix.

Stay safe!

Data Source: Yahoo Finance

Disclaimer - The author is not advocating any of the stocks listed here. Consult your Registered Rep, RIA or Financial Planner for an appropriate asset allocation model and the suitability of stocks and other holdings for you.

-Sid Som

homequant@gmail.com

Link to Sid's Books