J&J Releases COVID-19 Vaccine Data

We're not making any changes to our $158 fair value estimate for Johnson & Johnson JNJ following mixed data from the phase 3 Ensemble study of the firm's adenoviral vector COVID-19 vaccine. Data from Johnson & Johnson--as well as recent data from Novavax's NVAX antigen-based vaccine program--gives us more insight into the efficacy of key vaccine programs against new variants emerging in different geographies around the world. While we think the leading authorized and investigational vaccines all offer solid protection against severe disease--which is key to moving beyond the pandemic--vaccinated individuals may require an additional booster shot to cover new variants of the virus, particularly while cases are likely to continue to spread across much of the globe heading into 2022.

We expect revenue from booster shots may slightly raise our $40 Pfizer PFE fair value estimate and more moderately increase our $70 BioNTech BNTX fair value estimate, as we expect those firms' for-profit vaccine Comirnaty to see upside to our current 2022 and 2023 sales forecasts. Johnson & Johnson's not-for-profit strategy for commercialization prevents these results from having any significant impact on our valuation of the firm. However, we do think that affordable vaccine pricing and the rapid development timelines for COVID-19 vaccines reduce potential pressure from more aggressive U.S. drug pricing policy reform under the Biden administration. In addition, evidence of solid innovation with vaccine development at Johnson & Johnson and Pfizer helps support their wide economic moats, and BioNTech has a positive moat trend given its nascent technology and recent commercialization of its first vaccine.

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