These pharma and biotech players could become long-term winners.
The S&P 500 rose to a record high earlier this year, confirming its presence in a bull market, and has continued to soar, reaching new highs in recent weeks. Technology stocks, especially those involved in the area of artificial intelligence (AI), have led the gains, but companies in other fields also have benefited from this market optimism -- especially those that have reported solid earnings in recent times.
A great way for you to benefit during the bull market is to get in on these stocks that have momentum, but it's also important to think beyond the bull market. Will these companies maintain strength over the long run? If so, they could make excellent buys today. And along with these players, it's also a good idea to pick up some stocks that still may be in the doldrums but could have a very promising future. Together, these stocks may score a win for you in the bull market and beyond.
You'll find plenty of these stocks in the area of biotech and pharma -- let's check out three in particular that are just waiting to soar.
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1. Novavax
Novavax (NVAX -1.89%) actually has gotten a start along the path to gains, soaring more than 200% this year. But its key to put this increase into perspective: The stock had fallen to extreme lows after the coronavirus vaccine company reported lower-than-expected vaccine sales -- and even questioned its ability to continue operations.
Things have turned around for Novavax, though, thanks to a partnership with Sanofi. The French pharmaceutical company is a vaccine specialist and struck a deal that includes the co-commercialization of Novavax's coronavirus vaccine as of next year. The agreement offers Novavax $500 million up front as well as other payments that could total $700 million.
The Sanofi partnership removes a lot of the risk associated with Novavax stock and should help the company continue along the path to develop a potential winning product: a combined flu/coronavirus vaccine. Novavax's candidate already has delivered positive results from its phase 2 trial and the company aims for commercialization in 2026.
If this program continues to advance smoothly and Novavax's covid vaccine sales strengthen this coming vaccine season, the shares could climb significantly from here.
2. Pfizer
Pfizer (PFE 1.59%) also has suffered as demand for coronavirus vaccination declines. The company is a leader in this market, with the vaccine once helping it to surpass $100 billion in annual revenue. These days, though, Pfizer is cutting costs to better align its spending with the revenue opportunity. In the near term, the cost cuts, resulting in expenses such as severance pay, may weigh on earnings.
On top of this, some of Pfizer's biggest drugs face loss of exclusivity, which could equal about $17 billion in lost revenue over the next few years. But the cost realignment plan and Pfizer's focus on its new drugs and programs -- including its acquisition of oncology specialist Seagen -- should pay off over time. Pfizer expects its drug launches through the first half of this year to generate $20 billion in revenue in 2030 and revenue from business deals to bring in $25 billion.
Pfizer's efforts in oncology look promising, with oncology product revenue climbing 19% in the most recent quarter. And Pfizer has set a goal of increasing its blockbuster oncology drugs from five today to more than eight in 2030.
All of this could lead to major gains for Pfizer shares, making them a great buy for 12x forward earnings estimates.
3. Ginkgo Bioworks
Ginkgo Bioworks (DNA -1.82%) is a cell engineering company serving a wide variety of industries from drugmakers to agriculture and materials. Through its foundry, the company programs cells at scale, using automation, software, and other tools -- and helps customers speed up and generally improve development of their products.
In the most recent quarter, the company's new cell engineering programs rose 31%, and current active programs climbed 41% to 140. The company also has a biosecurity business -- revenue there hasn't been steady, but Ginkgo aims to turn this unit into a recurrent revenue business by focusing on biosecurity infrastructure development.
Ginkgo's stock has dropped significantly since the company's 2021 initial public offering, but for an investor who can handle some risk, it's worth scooping up a few shares now. Demand for Ginkgo's foundry services is strong, the company recently launched a cost savings program to reach adjusted EBITDA breakeven by the end of 2026 -- and Ginkgo has more than $800 million in cash and no bank debt.
So, if things progress from here, Ginkgo's once struggling stock could go on to soar.
Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool has a disclosure policy.
