Biotech Stocks: What Will 2021 Look Like?

When COVID-19 hit, the biotech sector became the primary focus of the entire stock market. Last year everybody was talking about the vaccine race, and some anonymous companies became household names. What will happen to biotech stocks in 2021? Corinne Cardina, bureau chief for Healthcare and Cannabis at Fool.com, and Motley Fool writer Taylor Carmichael discuss major trends in the biotech sector. This segment was recorded live on March 5. 

Corinne Cardina: What would you say are kind of the big themes for biotech that we saw in 2020, and what do you think are already emerging as the defining topics for 2021?

Taylor Carmichael: Yeah, 2020 obviously COVID-19 overwhelmed everything, and in your biotech portfolio, you really could tell the difference, if you had a COVID-19 fighter or you did not. We had incredible numbers from small cap companies that were providing vaccines or doing diagnostics. They had amazing growth last year. COVID-19 overwhelmed the entire stock market, not just biotechs, but that it was a huge difference because a lot of companies, they had to shut down clinical trials, there was just a massive shutdown. But the companies and there were quite a number of them actually that were focused on COVID-19 did really well. We're still seeing that in 2021. That's carried over into 2021 that in 2020 it was all anticipation about what the numbers would look like and whether they would get FDA approval. Now in 2021, we pretty much know the vaccines are going to be hitting the market. The diagnostic companies reporting amazing numbers, Fulgent (FLGT -0.15%) just came out yesterday with some amazing numbers, and the stock just skyrocketed. We're transitioning from anticipation of wonderful revenues to actual financials. It's mostly the small caps who really ridden a wave, I think, Moderna (MRNA -11.01%), Novavax (NVAX -6.36%), Fulgent, Co-Diagnostics (CODX -0.75%). It's really moving the needle, because they're tiny, and so much of COVID has taken over their business. That's still I think at least in my state, we're still in lockdown mode, so COVID-19 is still affecting the numbers. But I do think market looks ahead. It's a forward-looking mechanism and it's taking us out of COVID-19. Up till these last couple of weeks we've had a really good year. I guess, my number two for 2021 right now is we're having another crash that feels like a crash we had last year. I would not say that this is a COVID-related crash. It doesn't feel like that to me. Is just one of those kind of unexpected things that happen in the market, and that's where we've seen this week and last week. That's on our minds right now, I guess. But I don't think...this is not going to be a long term event in 2021. I do think we're going to come out of COVID this year. We're going to normalize, I think for Fools, you want to start thinking on the biotech side, how that process, how that shift is going to affect your different stocks.

Corinne Cardina: Yeah, absolutely. The biotech stocks have not been unscathed in this most recent bit. Moderna is down from where I actually bought it A couple of weeks ago. There are definitely some buying opportunities here, and Moderna started out pretty small in 2020. Now, it's at a $50 billion market cap. It was 70 before it took its most recent nosedive with the rest of the market. We're seeing it move from Moderna had no products revenue last year to then it had estimated $11 billion for 2021. Now, they've updated and said, oh, it's going to be $18 billion.

Taylor Carmichael: Wow.

Corinne Cardina: That's a great example of what the past year has done for some of these biotech stocks. Obviously, Moderna is a special case because they're one of three authorized vaccines in the US, but that one has been pretty exciting and it is looking pretty attractive at $124 today for the long term.

Taylor Carmichael: Did Johnson & Johnson (JNJ -0.25%) get authorization, I didn't know that.

Corinne Cardina: They did. They submit. It is important to remember that J&J is not planning to profit from their vaccine during the pandemic so they will be selling their vaccine doses at cost until the pandemic is considered over. J&J is enormous, it's certainly not going to move the needle.

Taylor Carmichael: Not at all. You're not going to make any money, I don't think in J&J. You might make money in J&J, COVID-19 is not going to move the needle for them.