Pfizer and Moderna created life-saving vaccines. So why are their stocks crumbling?

Pfizer, BioNTech and Moderna are experiencing a post-vaccine hangover on Wall Street this year.

All three stocks surged spectacularly in 2021, thanks largely to their Covid-19 vaccines’ success and strong sales. But 2022 hasn’t been as kind to them. Shares of Pfizer (PFE) are down about 15%, while its Comirnaty vaccine partner BioNTech (BNTX) has fallen 35%. Moderna (MRNA) has fared even worse, plunging more than 40%.

What gives? Sales of the Covid vaccines aren’t the problem. Pfizer has said that it expects revenue from Comirnaty to hit $32 billion in 2022 while Moderna has forecast that it could generate nearly $20 billion in revenue from its coronavirus shot this year. (Pfizer and BioNtech split the gross profits from the vaccine.)

Part of the reason for the stocks’ slump may simply be that investors already were anticipating strong demand and did what traders do best: Buy the rumor and sell the news. Pfizer’s stock soared more than 60% last year. BioNTech shot up more than 215% in 2021 while Moderna shares rose nearly 145%.

Upshot to come?

Looking ahead, however, there could still be some more upside tied to the vaccines — especially for Pfizer and BioNTech’s stocks. Health regulators in the United States approved booster doses of the Pfizer/BioNTech shot for 5- to 11-year olds earlier this week.

Pfizer also could get an additional boost from Covid treatments thanks to its Paxlovid antiviral pill, which was approved late last year. Pfizer has said it expects $22 billion in revenue from Paxlovid this year.

Pfizer CEO Albert Bourla talks during a press conference with European Commission President after a visit to oversee the production of the Pfizer-BioNtech Covid-19 vaccine at the factory of US pharmaceutical company Pfizer, in Puurs, on April 23, 2021.

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Pfizer may be best positioned of the three vaccine makers to thrive beyond Covid. The company has been on a buyout binge lately, most recently announcing plans to acquire migraine drug maker Biohaven (BHVN) for nearly $12 billion earlier this month.

“The deal is a good use of cash for Pfizer, taking advantage of its sizable war chest to diversify into an approved drug that is taking share in the market and could grow revenues meaningfully,” said CFRA Research analyst Stewart Glickman in a report following the Biohaven news.

The acquisition follows a nearly $7 billion deal late last year to buy Arena Pharmaceuticals, a company developing drugs to treat immuno-inflammatory diseases. Pfizer also acquired cancer drug maker Trillium Therapeutics last year for more than $2 billion. And even after all these deals, the company still has about $24 billion in cash on its balance sheet.

Pfizer’s diversification is one key reason why analysts are expecting that the company’s revenue will increase almost 30% this year and that earnings per share will be up more than 50%.

By contrast Moderna, which is not nearly as diversified as Pfizer, needs to find another big blockbuster. Nearly 97% of the company’s sales in the first quarter were from its Covid vaccine. Moderna’s sales are expected to be up about 20% this year but analysts are forecasting a drop in profit.

CEO Stéphane Bancel said during Moderna’s most recent earnings call with analysts earlier this month that two of the company’s top goals were to “expand beyond infectious disease vaccines into therapeutics” and to find merger candidates. Moderna is also working on vaccines for other viruses, such as HIV and Epstein-Barr.

But the company also recently suffered from a big public-relations gaffe. Moderna’s newly hired chief financial officer was forced to resign after just days on the job following the disclosure of financial irregularities that are being investigated at his former employer Dentsply Sirona (XRAY), a maker of X-ray machines and other dental equipment.

BioNTech, like Moderna, is also a bit of a one-trick pony right now in that nearly all of its first-quarter revenue was derived from Comirnaty. Pfizer generated only about half its sales from the vaccine in the first quarter.