Antipodes believes a mild cyclical recovery may be here sooner than many believe should positive news on vaccine development emerge. A positive vaccine outcome is key for Western consumers to fully normalise behaviour. It is a material positive outcome for a sustained re-opening of the economy and for related equity exposures.
In this podcast, Antipodes’ Healthcare Portfolio Manager Dr Nick Cameron interviews Dr Michael Farzan – one of the world’s leading experts on COVID-19 vaccine development.
Dr Farzan highlights the work happening behind the scenes in COVID-19 vaccine development and some of the challenges facing scientists. He says to-date significant progress has been made.
“I’m so confident we’re going to be able to make a decent vaccine, that even what I consider to be sub-optimally designed vaccines at this point, I expect to work effectively enough to make sense to distribute to the population,” Dr Farzan said during the podcast episode.
“Current vaccines (in development) are going to provide enough protection to keep most of us out of the hospital, to prevent most of us from having severe diseases, but perhaps not preventing most of us from transmitting to one another.
“Even from that starting point, we have a very large amount of running room to improve. The next generation of vaccines will be better than the first generation. And also maybe as importantly a boost even with a not-so-good vaccine can overcome the limitations of a not very good vaccine.
“I think in reasonable order, meaning certainly somewhere in 2021, anybody who will be willing to get a vaccine can have access to a vaccine.”
Listen to the full episode:
Dr Farzan is the Professor and Chair of the Department of Immunology and Microbiology at the Scripps Research Institute in Florida. He discovered the mechanism by which the SARS virus infected cells during the SARS outbreak of 2003 and is a foremost expert in HIV virology and vaccine development.
What if 2021 doesn’t deliver a vaccine?
Given how expensive the beneficiaries of the COVID-19 shutdown have become, Antipodes argues that vaccine disappointment is currently priced by the market as the base case.
The more likely scenario of a successful vaccine outcome is priced attractively in the current cheapness of quality cyclicals that have suffered during economic shutdowns and will benefit from re-opening. Further, the downside in quality cyclicals is protected by China’s successful normalisation and sustained recovery (without a vaccine) together with evolving government directed investment stimulus. This may shift the market’s narrow focus away from growth at any price.
With the backdrop of extreme valuation dispersion, long-term future market leaders are most likely to be found among today’s misunderstood lower multiple stocks.
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