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Vaccine Stocks Fall as Delta Becomes Dominant Variant in US

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Stocks of vaccine makers, Moderna (MRNA - Free Report) , Novavax (NVAX - Free Report) , and BioNTech (BNTX - Free Report) declined on Wednesday after the new, highly contagious variant of COVID-19, Delta (B.1.617.2) emerged as the most prevalent COVID-19 strain in the United States.

The COVID-19 vaccines available in the United States are Pfizer (PFE - Free Report) -BioNTech’s BNT162b2, Moderna’s mRNA-1273 and J&J’s (JNJ - Free Report) single-shot vaccine. AstraZeneca’s (AZN - Free Report) vaccine (called Vaxzevria in EU), though available in several countries, has not yet been launched in the United States. Novavax’s vaccine is still in late-stage development.

Per the latest data (as of July 3) from the US Centers for Disease Control and Prevention, the Delta variant has become the most dominant strain in the United States, accounting for almost 52% of new COVID-19 cases in the country. It has surpassed the proportion of cases —28.7% — linked to the Alpha variant, which had been dominant in the United States so far.

The Delta variant was first found in India and is rapidly spreading to other parts of the world, increasing the risk of infections across the globe. The variant is now found in 104 countries including the United States. The World Health Organization has warned that Delta will become the globally dominant variant of the coronavirus in the coming months.

While Novavax declined 13.7%, Moderna was down almost 5% and BioNTech stock declined 3.6% on Wednesday. The reason behind stocks of these vaccine makers taking a hit in response to rising cases of Delta variant in the United States is an increasing concern about their vaccines’ effectiveness against the highly infectious Delta variant and future COVID-19 variants as the virus evolves.

An increase in the number of cases linked to the Delta variant may cause more severe disease, especially among the unvaccinated people, which can lead to more hospitalizations, and potentially more deaths, which could worse the pandemic situation in the country. The pace of vaccination in some states of the United States has been very slow.

However, there is some data available to show that vaccines of Pfizer, Moderna and AstraZeneca are somewhat effective against the Delta variant.

In early July, J&J announced new data from studies that demonstrated that its one-shot COVID-19 vaccine generated strong neutralizing antibody activity against the Delta variant. In late June, Moderna announced new results from in vitro neutralization studies on sera from individuals vaccinated with its COVID-19 vaccine, mRNA-1273. Data showed that vaccination with mRNA-1273 can produce a neutralizing effect against all COVID-19 variants tested, including Delta.

Meanwhile, a study published on the U.K. government’s site in May mentioned that AstraZeneca and Pfizer’s vaccines are highly effective against the Delta variant after two doses.

We believe that the decline in stocks of the vaccine makers was rather premature and surprising. As concerns about future variants of the virus increase, the awareness about getting vaccinated should also increase. This, in turn, should boost vaccine sales of these companies. Also, the vaccine makers are innovating. They are making booster vaccines and also improving their existing vaccines to tackle the Delta variant and other future strains and mutations as the virus evolves.

BioNTech has a Zacks Rank #1 (Strong Buy). Moderna and AstraZeneca have a Zacks Rank #2 (Buy) while J&J and Pfizer currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

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