These Stocks Have The Most To Gain From Covid-19 Vaccine-Making And Distribution, According To Bank Of America

Topline

A slew of publicly traded firms along the vaccine supply chain are set to cash in as widespread inoculation kicks into high gear in the coming weeks; here are some of the firms set to profit the most from vaccine-making and distribution, according to a Bank of America note sent to clients on Wednesday.

NHS England Starts Covid-19 Vaccination Campaign — A phial of the Pfizer/BioNTech COVID-19 vaccine ready for administration at Guy’s Hospital at the … [+] start of the largest ever immunization program in the UK’s history on December 8.

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Key Facts

On the manufacturing front, Thermo Fisher Scientific, Merck and Avantor are among five firms set to see an overall sales boost of at least 15% each, thanks to their bioprocessing research work, with combined revenue potential of as much as $10 billion, Bank of America estimates.

Meanwhile, Pennsylvania-based West Pharmaceutical, the maker of rubber stoppers used for vaccine packaging, should lead gains in its industry, analysts forecast, with a more than 15% increase in profit, which last year totaled $242 million.

Sales opportunities in distribution are highest for Hong Kong-based airline Cathay Pacific due to its freight exposure and partnership with couriers like FedEx, UPS and DHL; Bank of America estimates the firm could see $640 million (HKD 5 billion) in revenue potential next year from transporting coronavirus vaccine doses.

In the United States, FedEx and UPS are estimated to see domestic revenues rise between $100 million to $300 million apiece for their vaccine distribution efforts, but that’s a pittance relative to overall annual revenues of roughly $20 billion each.

The outlook for refrigerated storage providers is still difficult to quantify, Bank of America notes, but engineering giants Emerson Electric and Trane Technologies could see revenue boosts of $1.3 billion and $2 billion, respectively, while Arkema and Thermo Fisher also have leading exposure in this market.

CVS Health and Walgreens Boots Alliance–the nation’s two largest drugstore chains–are best positioned in retail to benefit from onsite vaccinations, but the degree to which that impacts financials is contingent on the percentage of doses given in retail settings, as opposed to medical, which is still very uncertain, the bank says.

Crucial Quote

“The billions of syringes, millions of drugstore visits and thousands of flights don’t always translate to profit bonanzas for the companies in the vaccine supply chain, but we do anticipate significant benefits for some companies, especially those enabling vaccine manufacturing and those transporting the vaccine in Asia and Europe,” Bank of America analysts said on Wednesday.

Key Background

Widespread vaccination is just getting started. On Tuesday, a 90-year-old woman became the western world’s first recipient of a clinically approved Covid-19 vaccine, one of the Pfizer-BioNTech vaccines approved for emergency use in the United Kingdom last week. The nation’s government has already ordered 40 million of those doses, enough to vaccinate 20 million people. Meanwhile, the United States, whose population of 330 million is roughly five times greater than the United Kingdom’s, has only ordered enough vaccines to inoculate 50 million people.

What To Watch For

Bank of America biopharmaceutical analysts forecast roughly 200 million healthcare workers and elderly people will receive vaccines from either Moderna or Pfizer and BioNTech “over the coming months” following their emergency use authorizations in the United States, Europe and Japan. By the second half of next year, everyone in these three markets who wants a vaccine should be able to receive one, the bank predicts.

Big Number

1.65 billion. That’s the number of global coronavirus vaccine doses Bank of America analysts forecast will be distributed in 2021, just a fraction of the several billion doses vaccine-makers are currently estimating they’ll produce.