It’s a new milestone in the Covid-19 pandemic. People will soon roll up their sleeves and get jabbed with a booster shot tailored to the dominant coronavirus strain circulating in the U.S. Health officials have suggested this is likely to become a new pattern, joining the annual ritual of the flu shot. “For the first time since December of 2020, our vaccines have caught up with the virus,” said Dr. Ashish Jha, the White House’s Covid response coordinator, in a news conference held Tuesday to discuss the new bivalent vaccines from Pfizer/BioNTech and Moderna. Each year, about 1.3 billion flu shots are administered worldwide, according to Matt Linley, analytics director at Airfinity, a London-based health analytics company. He anticipates demand for annual Covid boosters will be between 1.5 billion and 2 billion doses. At the moment, more people — especially those in wealthier countries and those within more at-risk groups — will opt to get the newest boosters, but over time, uptake will likely follow flu shot trends, he said. For this year, there are sure to be a number of campaigns around the world encouraging people, especially those at high risk, to get an additional dose of vaccine. But Bank of America analyst Geoff Meacham is skeptical that a fall season will materialize for the Covid vaccines. Instead, he expects future infections will be treated with oral antivirals like Pfizer’s Paxlovid when needed. In any case, Meacham doesn’t expect the boosters to drive new interest in the stocks, saying many are “Covid-investing adverse.” The case for an annual Covid booster U.S. health regulatory agencies greenlighted the new shots last week. The vaccines target the highly contagious omicron sub-lineage BA.5, which is responsible for 90% of current new Covid infections. But the shots also take aim at the original Covid strain that emerged in Wuhan, China, in 2019 and the BA.4 variant. Pfizer – BioNTech’s version can be used to treat people ages 12 and up, while Moderna’s can be dispensed to those over 18. The Food and Drug Administration said anyone who has been vaccinated with the initial two doses of the primary vaccine as well as those who have received those shots plus one or two boosters are eligible. However, at least two months should have passed from the individual’s last dose. Those who recently were infected with Covid can wait a few months to be vaccinated . Although new variants may emerge, the latest vaccinations should provide better protection against infection and transmission. And they should be very effective in preventing severe disease. This likely will be the case even if BA.5 begins to mutate and a new subvariant emerges as the dominant strain. In a research note, Cantor Fitzgerald analyst Louise Chen said she was encouraged by the simple recommendations. “We believe the wording of the recommendations reflects an effort to make them simple and easy to communicate, more in-line with traditional [Advisory Committee on Immunization Practices] recommendations,” Chen said. She added, an annual vaccine program could be “an effective strategy” if SARS-CoV-2 becomes a seasonal virus. As of Aug. 24, about 72% of the U.S. population over the age of five years has received the initial series of the Covid vaccine, according to the Centers for Disease Control and Protection. About 49% of the population has received a first booster and just over a third has received a second booster dose, the CDC said. The U.S. government has purchased about 171 million doses of the bivalent vaccine for the fall. Europe, the U.K., Canada, Australia and Switzerland have also conditionally authorized the use of the new boosters. Declining vaccine revenue Also, even with the booster shots, both Pfizer/BioNTech and Moderna are expected to see their Covid vaccine revenue decline in the second half of this year compared with the first half. Combined, the two companies will have a 21% share of the global market this year, Airfinity said. Pfizer/BioNTech is expected to pull in about $32 billion in sales this year from both versions of the vaccine, while Moderna could tally about $21 billion in sales, Airfinity said. Bank of America’s Meacham said he’s bullish on Pfizer shares, which he rates a buy with a $65 price target. His target was reduced Wednesday from $70 due to Zantac litigation risk and Paxlovid supply constraints , which he expects to weigh on the stock’s multiple. Pfizer was also recently highlighted among Goldman Sachs’ value stock picks . Meacham’s target implies an upside of more than 40% from where Pfizer is currently trading. The stock is down about 22% year to date . He expects governments worldwide will look to stockpile Paxlovid to guard against any future Covid surges. Also, as payment for the medication shifts from governments to private health insurance plans, he expects Paxlovid will be considered a “gold standard” treatment and therefore have pricing power with payors. He’s more cautious on Moderna, which he rates neutral. He also lowered Moderna’s price target to $180 from $190, based on “modestly lower assumptions” for vaccine sales. Moderna shares are currently trading at about $134 a piece. The company is working on a next-generation flu vaccine that uses its mRNA technology and other combination vaccines that could protect against Covid, the flu and respiratory syncytial virus with one shot. But trials for these products are ongoing, and there is no guarantee that they will be successful. If they are, however, that could improve the likelihood that more people will seek out an annual shot. UBS analyst Eliana Merle said Moderna’s prospects beyond Covid will be what drives value for investors over the longer term. She called out some therapeutics that are being developed using its mRNA technology to treat rare disease as well as a next-gen flu shot, which promises improved efficacy. The company also is developing a personalized cancer vaccine. “We continue to see underappreciated value on the pipeline beyond COVID long term, but we think uncertainty around the sustainability of COVID revenues remains a near-term stock focus,” Merle wrote in a recent research note. Moderna will be hosting its R & D Day on Thursday , aiming to give investors a better sense of how programs are progressing in its pipeline. But it may be too soon to provide a good line of sight into the pipeline’s potential, Meacham said. “Moderna needs an encore,” he said. —CNBC’s Michael Bloom contributed to this report.
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