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Trade the race for a COVID-19 vaccine with our new Corona Blend
Scientists across the globe are racing to pull off an incredible feat – reducing the time it takes to develop a vaccine from years to months.
Our new Corona Blend allows you to trade a basket of the top stocks directly linked to the search for a COVID-19 vaccine. There are currently over 70 potential vaccines in development – the Corona Blend focusses on seven companies who are well positioned to lead the race.
Johnson & Johnson (JNJ)
Pharmaceutical giant Johnson & Johnson is facing stiff competition across the globe, but the company has a distinct advantage: it has two backup vaccine candidates in case its primary candidate encounters unexpected setbacks during trials. JNJ also has immense production capabilities – the company reckons it could produce 900 million doses by April 2021.
Our Analyst Recommendations tool gives Johnson & Johnson a 24% upside, but the consensus rating is a ‘Hold’. Hedge funds sold almost 100 million shares in the last quarter, while company insiders sold nearly 3.5 million in the last three months.
Pfizer, working in conjunction with BioNTech, has just received clearance to start running trials of its vaccine candidate in Germany. If all goes to plan the two companies expect to be able to produce millions of vaccines by the end of the year.
Pfizer is currently trading below the year’s opening levels, but analysts and hedge funds are bullish on the stock. PFE has a 17% upside and hedge funds bought 65 million new shares in the previous quarter.
Gilead Sciences (GILD)
Gilead has seen some huge gains on the back of news surrounding its ‘remdesivir’ antiviral drug, but the stock remains highly volatile. Overall our stock sentiment tools are showing positive signals – company insiders and hedge funds have been snapping up the stock, although GILD is already trading around the consensus price target from Wall Street analysts.
Regeneron Pharma (REGN)
REGN is up nearly 50% this year, with recent gains coming on the back of hopes for a ‘cocktail’ of antibodies that may help protect health workers from COVID-19 until a vaccine is created. Many companies are attempting to produce such an elixir, but Regeneron is well-positioned to lead the search.
Hedge funds added a total of 1 million REGN shares to their portfolios in the past quarter. Sentiment amongst top money managers is positive, while analysts rate the stock a ‘Buy’ and see a 10% upside.
Sanofi (SNY – NYSE)
Sanofi has partnered with GlaxoSmithKline to accelerate production of its vaccine, and the two companies are hoping to start clinical trials in the latter half of 2020. According to Sanofi CEO Paul Hudson, the company will be able to produce 600 million doses of the vaccine in 2021 if everything goes to plan.
Moderna Inc (MRNA)
Moderna stock jumped 10% on April 20th as investors began piling into pharmaceutical companies. The company’s mRNA-1273 vaccine candidate will receive $483 million in funding for Phase II and III clinical trials from the US Biomedical Advanced Research and Development Authority (BARDA).
MRNA has a ‘Strong Buy’ rating according to our Analyst Recommendations tool, although the average price target is 19% below the current trading price.
Vir Biotechnology (VIR)
Vir recently announced that it was joining forces with GlaxoSmithKline to combat COVID-19. GSK stated that it will make a $250 million equity investment in Vir, and that some ‘promising antibody candidates ‘ will be ‘accelerated into phase 2 clinical trials within the next three to five months’.
Vir Biotechnology currently has a ‘Neutral’ rating, according to our Analyst Recommendations tool. The average target price is $31, barely above the current price. Estimates range from $20 up to $41.
Trade the vaccine trials with the Corona Blend
Will one of these companies be the one to develop a working coronavirus vaccine, or will an outsider beat them to it? Trade the Corona Blend long or short to capture the performance of these top pharma stocks.
Dow earnings kick off, European markets pare gains, gold hits fresh high
European markets still traded broadly higher into lunch but failed to make much headway in a pretty lacklustre session. The FTSE 100 failed the test at 5900 and retreated to 5800 where it found support. Bear in mind this comes after a near 4% gain in the last trading session on Thursday. The DAX was off its highs but still traded up 1% for the session. As of send time, Wall Street is more positive and the Dow was looking to open about 300 points higher.
Meanwhile corporate earnings kicked off today with two Dow components first on the slate. Johnson & Johnson raised its dividend but lowered its guidance for 2020 to reflect the Covid-19 impact. The dividend was raised by 6.3% to $1.01 on adjusted earnings per share of $2.30 vs $2.01 forecast.
JPMorgan EPS came in a 78 cents vs $1.84 expected and $2.57 a year ago. The key thing was credit costs – provisions for losses jumped to $8.3bn, which was double the median estimate, although it was a lot lower than the $25bn that one analyst forecast. Last year the number was $1.3bn. The bank is preparing for a severe recession and needs to set aside capital to cover expected losses – problem is no one has a clue how big these might be. I should stress that even the cleverest banks won’t know just what the damage will be in a situation where the economy is stopped and then restarted. No big surprise to see a big improvement in trading revenues whilst similarly the drop in investment banking earnings was to be expected.
Wells Fargo was similarly weak – $0.01 EPS vs $0.33 expected down to the build-up of a huge capital buffer against expected credit losses. The bank raised its reserves by $3.1bn and took a $950 impairment charge that produced a headwind of $0.73 on EPS.
Gold pushed up to set fresh 7-year highs with spot up at $1727. The move higher comes investors hedge their bets against a sharp decline corporate earnings and a deluge of central bank printing. US retail sales tomorrow and China’s GDP print on Friday are likely to be the chief macro events to focus on. Whilst the gold safety net is all about the decline in real yields, the idea that central bank printing will lead to inflation seems a step too far given the profoundly deflationary shock from Covid-19. Nevertheless, despite inflation and inflation expectations tumbling the impact of Fed and other central bank easing could see real yields drop further into negative territory.
Crude oil futures (Front month WTI) were weaker still with $22 cracking. The massive contango still leaves the Jun contract at above $29. The spread means Spot Oil on the platform is trading with a huge premium to the normal futures contract. A retrace to $20 looks possible for the futures and the real question is how the Jun and further out contracts can hold up where they are. Whilst OPEC has cut output and US production is coming off sharply, the massive build in inventories will surely take time to unwind and we do not see a sudden rebound in demand as economies take time to come out of lockdown. Even when restrictions are lifted, it will take time for people to drive and fly as much as they did. And as far as the OPEC deal goes, Oman’s March output was up 13% in March vs February.
In FX, the pound was unmoved by the OBR saying that UK GDP could decline by 35% in the second quarter. The coronavirus will cause a deep recession and a £220bn black hole in the public purse, according to the watchdog. This is a known – what matters is how soon the exit from lockdown and how quickly the recovery. The latter depends to a huge degree on how effective the fiscal support has been – how well has money and relief got to companies and individuals. The hit to sentiment long term is going to be much harder to get over.
GBPUSD held gains north of 1.2530. As per this morning, the pair is looking to hold the rally above the 61.8 retracement at 1.25150. March swing highs around 1.2650 offer near-term resistance to the bulls, as well as the 200-day moving average at 1.2657.