Two Trade Ideas from this morning's PSW Report:
BioNTech (who co-developed the PFE vaccine) is a similar company to MRNA and it's also popping, Yodi had the idea back on Nov 2nd and we turned it into a trade in our Live Member chat Room:
BNTX/Yodi – Hard to say whether or not they are a one-trick pony but one trick is all they need as we'll be getting Covid vaccines every year, it looks like. They are not wasting this opportunity and are developing 20 more vaccines with potential to launch over the next 5 years. They are also working on cancer therapies – obviously huge money IF they can get a winner. Overall, BNTX is as likely as MRNA to succeed over the long haul and MRNA has a $136Bn valuation on $20Bn in sales with $12Bn in profit while BNTX gets less respect with a $66Bn valuation, $16Bn in sales and $9Bn in profits. Since their burn rate in 2019 was only $279M, their cash ($8.5Bn) with another $18Bn coming means they will be able to work on whatever they want for quite a long time.
So I think Yodi has found a worthwhile investment but, unfortunately, it's a pricey stock so it only fits in our LTP at $283.50. In the LTP, let's:
- Sell 5 BNTX 2024 $200 puts for $35 ($17,500)
- Buy 10 BNTX 2024 $300 calls at $80 ($80,000)
- Sell 10 BNTX 2024 $400 calls at $54 ($54,000)
That's net $8,500 on the $100,000 spread so you have to love the upside potential of $91,500 (1,076%) but we're not in the money – it's a speculative bet that they do find something else to sell over the next 12 months, otherwise our investing premise is dead. So let's remember to keep an eye on these and hopefully Pharm will have some color commentary on the subject when he checks in.
