Johnson & Johnson Stock Price Surges 7% On a $450 Million Coronavirus Vaccine Contract

Johnson & Johnson Stock Price Surges 7% On a $450 Million Coronavirus Vaccine Contract
Written by:
Michael Harris
30th March, 16:39
Updated: 3rd April, 04:35
  • Two contracts signed between the Trump administration and J&J are worth more than $600 million
  • Human testing should start in September, while emergency use may be authorized in early 2021
  • Johnson & Johnson stock price jumps 7%, tests key short-term resistance

Shares of Johnson and Johnson (NYSE:JNJ) jumped more than 7% today, after the company’s arm Janssen announced it signed a $456 million dollar order with the Trump administration on the order titled the “new vaccine asset for 2019 Novel Coronavirus (COVID-19)”.

Fundamental analysis: More than $1 billion committed in research

Ten days ago, Janssen signed another contract with the Health and Human Services Office of the Assistant Secretary for Preparedness and Response (ASPR) worth $150 million dollar or a “new antiviral” for COVID-19.

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Together with the U.S. government, Johnson and Johnson will spend north of $1 billion on vaccine research.

“We have very good early indicators that not only can we depend on this to be a safe vaccine base but also one that will ultimately be effective based on all the early testing and modelling we’ve been doing,” Chairman and CEO Alex Gorsky said.

The company said it plans to start testing its vaccine on humans in September, when the vaccine will enter a phase 1 human clinical study, while the pharmaceutical giant eyes early 2021 aimed for emergency use.

“This is a bit of a moonshot for J&J going forward, but it’s one we feel is very, very important for use to be doing at this period in time,” Gorsky added.

The overall goal is to produce more than 1 billion doses of the potential vaccine. To meet this goal, J&J will invest further to expand its manufacturing capacities

Earlier this month, the pharma giant announced a partnership with the Beth Israel Deaconess Medical Center in developing potential preventive vaccine candidates for COVID-19.

Technical analysis: Stock price tests the intra-week resistance

Following today’s news, shares of J&J gapped higher to trade more than 7% to the upside. The price action is currently testing key short-term resistance near the $132 handle.

Johnson & Jonhson stock weekly chart (TradingView)

Following a creation of the 4-year low last week, the price action has rebounded strongly, gaining around 20% from the lows. This is not surprising, given the importance and strength of the support zone near the $110 handle.

A break of the $131 handle, which is currently put to a test, would open the door for a move towards $135.

Summary

Shares of Johnson and Johnson have gained more than 7% today after the pharma giant announced it has signed a contract worth more than $450 million with the Trump administration to work on the development of the COVID-19 vaccine.

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