How to invest in a Covid-19 vaccine and should you do it?

Attempting to navigate your way through the swathes of misinformation surrounding the coronavirus and a potential vaccine that exists online can be a challenging pastime, which is why some politicians are pushing for emergency social media laws to combat this plague .

However, one piece of real news to cut through the noise recently surrounded the development of a potential Covid-19 vaccine by BioNTech and co-developers Pfizer, whose offering could prevent more than 90% of people from contracting the virus following mass testing of 43,000 people across the globe.

This has raised hopes that life could return to normal by next winter, but is now the time to invest in a potential coronavirus vaccine? Consider the following:

Determine Your Risk Tolerance

There’s no such thing as a risk-free investment; while those who want to pursue huge returns must also encumber themselves with the appropriate level of risk.

This brings us onto the importance of risk tolerance, and it’s important to determine this before you commit to a coronavirus vaccine investment.

Fortunately, there are stocks that offer variable risk profiles in this niche space, with relatively low-risk options including the aforementioned BioNTech and Pfizer stocks. However, these entities have seen their value soared during the last week , making them prohibitively priced and diminishing their potential return.

The key here is to appraise all investment options before proceeding, ensuring that they suit your risk tolerance and meet your expectations with regards to a return.

Identify Viable Stocks to Suit Your Style

When it comes to identifying such stocks, you’ll ideally target equities based on their characterisation as either low, medium or high risk options.

As we’ve already said, Pfizer and their partners BioNTech offer low-risk (albeit expensive) options in the current market, but such equities have little room for extended growth in the near-term. The future downside is therefore more pronounced, especially if the vaccine trial runs into challenges and fails to deliver on its initial promise.

In terms of mid-risk stocks, there are plenty of pharma companies that have vaccines in late-stage testing but have yet to have their offerings approved. Of these, the US firm Moderna boasts the highest level of governmental funding , and may well be poised to announce a breakthrough in the future.

Other firms that have yet to enter the late-stage testing programs would exist in the high-risk category, and while these are more competitively priced that may be too late to experience a future surge in value.

Evaluate Opportunities and Time Your Move

For those interested in low-risk options such as Pfizer and BioNTech, the opportunity may have passed to invest and optimise profitability.

However, it’s worth watching and appraising the performance of mid and high-risk vaccine options in the near-term, while also considering investment opportunities that may arise in specific industries that will benefit from the introduction of a vaccine (including aviation and leisure).

You should also review your options and consider trading them on a wider range of factors, as some may offer value even if their coronavirus vaccine fails to pass muster.

Take AstraZeneca, for example, which is a large scale pharma company that owns a number of blockbuster franchises and boasts robust growth prospects across the board.