Many of the pandemic’s stock darlings have crashed, and they won’t rebound anytime soon because consumer habits have shifted. But if you dig deeper, you can find some of the best bargains in today’s overvalued market. Case in point: COVID vaccine makers Moderna (MRNA) and BioNTech (BNTX) made tens of billions of dollars in 2021 and 2022. Now that the virus has ebbed, Moderna stock plummeted 54.19% in 2023 and BioNTech, 32.4%.* Why contrarian investors should pay attention…

COVID vaccine sales remain substantial because the virus will afflict the planet for years. The companies’ annual revenue projections for vaccinations range from $4 billion to $8 billion. Plus, both can charge more as the vaccines move into the US commercial market, where each dose will cost about $120, versus the $20 the US government paid.

Underappreciated drug pipelines use the same messenger RNA (mRNA) technology underpinning their COVID vaccines. Moderna plans to launch 15 products in the next few years, including vaccines for melanoma, RSV and a COVID-flu shot. BioNTech has a growing pipeline of oncology therapies based on mRNA technology as well as antibody and cell therapies that are advancing into larger trials, which could allow approvals beginning in 2026.

My take: Moderna is riskier but potentially more lucrative. It is trading at a steeper discount to our valuation than BioNTech, but management has devoted so much capital to research and development that it won’t be profitable again until 2026. BioNTech is profitable and has $16 billion cash on its balance sheet, about 70% of its market value.

*All performance figures for 2023 are through December 11, 2023.

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