2 low stocks to buy and hold for a decade

Pfizer (PFE -0.81%) and Modern (MRNA -3.42%) they were rock stars on the stock market a few years ago. Both companies have developed successful vaccines against the coronavirus, efforts for which have been rewarded handsomely, financially and on the stock market. However, as the pandemic subsided, both companies lost their appeal in the eyes of many investors. Their stock has significantly outperformed the market over the past two years.

Is there any hope that Pfizer and Moderna will bounce back? The answer is yes. These companies could even provide excellent returns to patient investors over the next decade.

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1. Pfizer

While Pfizer hasn’t performed well lately, it’s important to point out that if the company hadn’t made several big moves in recent years, its business would be much worse. Pfizer’s management opted to spin off Upjohn’s off-patent drug unit, which had become a deadweight to its bottom line. Of course, there’s also Pfizer’s decision to team up BioNTech to develop a COVID-19 vaccine.

All of this happened when Xeljanz, one of the company’s growth drivers, ceased to be one, in part because regulators discovered some safety issues with the drug. If it weren’t for the revenue it generated from its coronavirus portfolio and the decision to spin off Upjohn, Pfizer would have performed even worse. All of these moves will pay off more than they already have. Pfizer’s second-quarter revenue rose 2 percent year over year to $13.3 billion, marking the first time in a while that the company’s sales moved in the right direction.

The drugmaker won several major approvals last year and is still developing important drugs. Pfizer’s experimental GLP-1 weight loss drug danuglipron posted positive results in a mid-term study.

The company also recently reported positive Phase 2 results for ponsegromab, a potential drug for cancer cachexia — cachexia is a condition that can cause significant weight and muscle loss in patients with certain diseases. During the study, ponsegromab led to statistically significant increases in weight and muscle mass in patients with lung cancer, pancreatic cancer, and colorectal cancer. In addition, the drug’s safety profile appeared reasonable.

Cachexia is a life-threatening condition that affects approximately 9 million patients worldwide, but there are no US Food and Drug Administration-approved treatments for it. Could ponsegromab become the first? May be. Importantly, Pfizer has an exciting pipeline that includes 113 programs. The company will win more approvals and label extensions over the years as its COVID-19 lineup stops negatively impacting its top line. As Pfizer’s financial results recover, it could deliver solid profits through 2034.

2. Modern

Although it has performed quite well this year, Moderna’s stock has recently fallen after it announced a pair of news. First, the biotech now projects that it will break even, at least on an operating cost basis, in 2028. Moderna previously said it would break even by 2026. Second, the company said it will reduce research and development spending by about $1.1 billion by 2026. 2027 No vaccine developer can be successful without spending a fair amount on research and development.

There is no magic number, but the market saw Moderna’s decrease in R&D budget as a bad sign. That said, the company has made significant progress over the past two years. Moderna has won approval for mRESVIA, a vaccine against respiratory syncytial virus. It reported positive Phase 3 results for a combination coronavirus/flu vaccine, an area where Pfizer’s competing candidate failed.

Its stand-alone flu vaccine for the elderly has also been favored in an advanced-stage study.

Moderna remains the leader in the COVID-19 vaccine market. In the second quarter, it reported revenue of $241 million, though that was down $344 million from the year-ago period. Moderna expects much more revenue as the fall and winter seasons approach — that’s peak vaccine season. It projects net product sales of $3 billion to $3.5 billion for the year.

In addition to its candidates that recently posted positive later-stage results, Moderna has several other products in Phase 3 trials that could win approval within three years. These include Moderna’s personalized cancer vaccine and a potential cytomegalovirus vaccine. Moderna is already showing that its success in developing a vaccine against the coronavirus was no fluke. The stock still looks attractive for long-term biotech investors.