Forget Moderna! This is a more lucrative coronavirus stock


During the first 10 years of Moderna‘s (NASDAQ: mRNA) existence, the pharmaceutical and biotechnology company has not launched a single product on the market. That changed last December when its coronavirus vaccine, mRNA-1273, received Emergency Use Clearance (EUA) from the United States Food and Drug Administration (FDA).

The regulatory approval received by mRNA-1273 helps to give more credibility to Moderna’s master plan. The company is looking to develop a series of mRNA vaccines for infectious diseases, and until a few months ago, no vaccine of the mRNA variety had ever obtained FDA (or EUA ).

Moderna may seem like an attractive investment because of these factors, but the company remains a risky bet in the long run. Other than mRNA-1273, none of its pipeline candidates have yet reached a Phase 3 clinical trial; these investigational vaccines may face negative clinical trial results, regulatory hurdles, competition from other biotechnologies, and other hurdles.

While there may be a windfall ahead for Moderna thanks to mRNA-1273, there are other companies involved in coronavirus vaccines or testing that have superior track records in terms of consistent income and earnings. , and still have long avenues for growth. One of these companies is Abbott Laboratories (NYSE: ABT). Here’s why the medical device giant is worth buying.

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Abbott Laboratories COVID-19 efforts

At the height of the pandemic, curbing the spread of COVID-19 required rapid and accurate diagnostic test kits. Abbott Laboratories has designed and marketed several test options to detect the SARS-CoV-2 virus that causes the disease. Perhaps the most famous of these is its ID NOW COVID-19 diagnostic test, a portable molecular test kit that can provide results in as little as five minutes.

Abbott’s work related to the coronavirus has clearly had a significant impact on his bottom line. For his fourth trimester, which ended on Dec.31, 2020 – in which it delivered more than 300 million COVID-19 tests – the company reported revenue of $ 10.7 billion, an increase of 28.7 % year over year. Abbott’s COVID-19 diagnostic tests generated $ 2.4 billion in revenue.

For its full fiscal year 2020, the company reported revenue of $ 34.6 billion, an 8.5% increase from fiscal 2019. Abbott’s bottom line was everything. Also impressive, with adjusted earnings per share (EPS) for the fourth quarter at $ 1.45, up 52.6% from the same period last year. His adjusted EPS for the full year was $ 3.65, much better than the $ 3.24 he recorded in his previous fiscal year.

It should be noted that many medical device manufacturers have encountered serious headwinds over the past year as the volume of elective surgeries has plummeted due to the pandemic. Despite these obstacles, Abbott Laboratories have found a way to achieve excellent financial results.

Rolled up dollar bills stacked in the form of a rising bar graph

Image source: Getty Images.

More growth to come

Abbott has not finished profiting from his coronavirus-related efforts. The company expects adjusted EPS of at least $ 5.00 for fiscal 2021. According to CEO Robert Ford, COVID-19 testing will continue to be a major growth driver.

Ford expects demand to remain high despite the vaccine rollout. Market research and consulting firm Grand View Research estimates this segment will grow at a 3.1% compound annual growth rate between 2021 and 2027, and Abbott Laboratories is well positioned to capitalize on this.

Other opportunities are available to the company. First, there is its MitraClip system, one of the leading devices on the market for the treatment of mitral regurgitation. This condition affects a patient’s mitral valve, resulting in problems with blood flow.

If severe enough and left untreated, this disorder can lead to other serious health problems. Abbott’s MitraClip allows doctors to treat the disease non-invasively – that is, without the need for open surgery. It has been shown in clinical trials to improve health outcomes while reducing hospital admissions.

Last year, the FDA approved the fourth generation version of this device, MitraClip G4. And more recently, Medicare has extended the system’s reimbursement coverage, which will significantly increase the market for the device in the country. Meanwhile, Abbott is already working on the next version of the MitraClip system.

Second, there is Abbott’s diabetes care segment. The company’s FreeStyle Libre is a continuous glucose monitoring (CGM) system that allows patients with diabetes to track their blood sugar. In Abbott’s 2020 fiscal year, the diabetes care segment reported revenue of $ 3.3 billion, an increase of 29.4% year-over-year.

Much of this impressive growth is due to the FreeStyle Libre franchise. The CGM market will continue to grow at a good pace, and Abbott Laboratories is expected to remain one of the leaders. These and other opportunities will help the company achieve consistently strong financial results.

A juicy dividend too

There’s another major reason Abbott Laboratories is a more lucrative stock than Moderna: The medical device company is a Dividend Aristocrat, having increased its dividend for 49 consecutive years; it currently offers a yield of 1.23%. Even though it’s below average S&P 500 yield of 1.57%, it is higher than Moderna, which offers no dividend. Abbott also has a cash payout ratio of 54.22%, which gives the health giant plenty of room for future dividend increases. In short, Abbott Laboratories is also a decent option for income-oriented investors.

A better bet than Moderna

While Moderna has outperformed Abbott Laboratories over the past year and will likely continue to see strong growth over the next two years, life after its coronavirus vaccine is less certain at this time. In contrast, Abbott has a long history of success, offers excellent long-term growth prospects and delivers a dividend to its shareholders. Between these two companies, Abbott Laboratories appears to be the more lucrative option for long-term investors.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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