Healthcare continues to lag in the broader market. Year to date, the Standards and Practices (S&P) 500 Health Care index is down 2% versus a 17% gain in the benchmark S&P 500 index. The declines among healthcare stocks are broad-based, with health insurers, pharmaceutical companies and device manufacturers all trailing the stock market. Fears of a recession and a presidential election cycle kicking into gear help to account for the declines. Spending on non-urgent medical procedures tends to taper off in bad economic times, and healthcare is always a hot button issue on the campaign trail.
Other reasons for the downturn in healthcare equities include poor earnings on the part of many healthcare service providers, and a dramatic drop-off in Covid-19 vaccine sales and related medical care. With the outlook for the healthcare sector remaining cloudy, we offer up the following three healthcare stocks to sell in August before they crash and burn. It is no coincidence that these stocks are all makers of Covid-19 vaccines.
Moderna’s (NASDAQ:MRNA) stock continues to suffer the worst Covid-19 hangover. The biopharmaceutical company, whose share price skyrocketed during the pandemic, has come crashing back to earth. So far in 2023, MRNA stock is down 44% and trading below $100. The company’s share price is now trading nearly 80% below the all-time high it reached in September 2021 as it racked up billions of dollars in global vaccine sales.
Moderna just reported ugly second-quarter financial results that showed sales of its Covid-19 shot dropping 94% from a year earlier. Total revenue at the company declined to $344 million from $4.75 billion. While the drug maker continues to tout its pipeline of new products that includes several cancer treatments and a medication against influenza, the Covid-19 vaccine is currently Moderna’s only marketable product. MRNA stock is risky and a healthcare security to sell in August.
Novavax (NASDAQ:NVAX) just came out with second-quarter financials that showed a surprise profit at the vaccine maker. Having said that, don’t be fooled. The approval and subsequent rollout of the company’s Covid-19 vaccine has been a major disaster. In fact, that the company earlier this year warned about its ability to remain in business. A true Johnny-come-lately, Novavax’s Covid-19 vaccine was so behind in terms of coming to market that by the time it arrived, demand for the medication had dropped all around the world.
Novavax’s strategy for its Covid-19 vaccine largely consisted of offloading it in third-world countries where some demand for the medication remained. That strategy hasn’t proven to be the best one for the company. Novavax was given a lifeline recently by the Canadian government which decided to pay $350 million for forfeiting Covid-19 vaccine doses that were ordered but no longer needed. For Q3 of this year, Novavax warned that it is likely to have no sales as the United States Food and Drug Administration (FDA) isn’t likely to make a decision on its newest Covid-19 shot until late September. NVAX stock has plunged 87% in the last 12 months. It is clearly time to sell.
Lastly, we have drug maker Pfizer (NYSE:PFE), which is also enduring a reversal of fortune as sales of its approved Covid-19 vaccine decline. As with Moderna, Pfizer just reported a steep decline in sales of its Covid-19 vaccine during Q2. The company announced a 54% slide in its Q2 revenue to $12.73 billion. However, removing sales of the company’s Covid-19 vaccine and Covid-19 antiviral pill called Paxlovid, revenue at Pfizer actually grew 5% from a year earlier.
Sales of Pfizer’s Covid-19 medications totaled $1.6 billion in the quarter ended June 30 of this year. In 2022, Pfizer sold $37.8 billion of its Covid-19 vaccine worldwide, powering the company’s revenue for that year to a record $100 billion. Now, Pfizer has lowered its 2023 sales forecast to a range of $67 billion to $70 billion, down from a previous outlook of $67 billion to $71 billion, citing continued weakness in Covid-19 vaccine revenues. Company executives continue to say they are in a “transition period.” PFE stock is down 30% this year.