The Principal Healthcare Innovators Index ETF (Nasdaq: BTEC) got a lift Monday and it was none other than Moderna pushing the already hot ETF to new highs.
BTEC tracks the Nasdaq U.S. Healthcare Innovators Index, which is designed to provide exposure to early-stage small-capitalization healthcare companies. These are primarily biotechnology and life science, which have the potential to create cures for cancer, develop new medical technologies, or spearhead other medical advances.
Entering Monday, BTEC had a 4.44% weight to Moderna, making the stock the fund’s largest holding. BTEC is one of a small number of ETFs that feature Moderna as the biggest component. That was meaningful yesterday on news that the vaccine maker is joining the prestigious Nasdaq-100 Index (NDX).
“In addition, Jefferies initiated coverage of the pharmaceutical company Monday with a “buy” rating and a $90 price target, representing 45% upside from where the stock closed Friday. Shares of Moderna surged as much as 18% Monday,” reports Business Insider.
Meaningful Moderna
A host of healthcare behemoths such as J&J and Pfizer are also working on feverishly to generate vaccines. Some of these will be potential aides will be available for testing this fall but for not for mass consumption globally until next year.
While the process to generate a new vaccine is likely to take some time, rather than pin their hopes on one particular company, investors can bet on a broad swath of biotech companies using ETFs.
Moderna’s vaccine also created neutralizing antibodies against the disease in at least eight participants. These neutralizing antibodies could be valuable in acquiring protection from the coronavirus, according to experts. FDA had recently provided Fast Track status for this vaccine.
“In the first full year of sales of its potential vaccine, Jefferies’ model shows it could bring in $2 billion worldwide if roughly 50 million people get the vaccine at $50. This could grow to a peak of $5 billion between 2025 and 2026, according to the note,” according to Business Insider.
On multiple fronts, BTEC is poised to benefit as the fight against the coronavirus ramps up.
According to Goldman Sachs, the rising number of coronavirus cases will limit growth in a third-quarter rebound per a CNBC report. This should continue to put healthcare-related exchange-traded funds (ETFs) in the forefront.
Goldman Sachs’ “economists now see third-quarter gross domestic product rising by 25% on an annualized basis. That’s down from the initial estimate of 33%, with the reduction due primarily to concerns that increasing virus cases in states such as Florida, Texas, and Arizona will slow the pace of reopening.”
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.