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Every Stocks and Sharers ISA portfolio has a few weeds in it. It comes with the territory. But these two stocks from the healthcare sector are sticking out like a pair of sore thumbs in mine.
A falling knife
Let’s start with Moderna (NASDAQ: MRNA). I first bought the shares in 2022 after they’d dropped 50%, then doubled down at the start of 2024 when they dipped below $90.
Now they’re at $32 after falling 20% year to date.
Now, I didn’t go in totally blind about Covid vaccine sales. I knew they’d fall once everyone got back to normality. I still remember how groggy I was after my first pair of jabs, and I’m not overly keen to feel like that again.
However, I thought sales would prove durable enough to see the biotech firm through to the next (more exciting) phase of its development. That would involve a new class of mRNA medicines for heart disease, cancer, HIV, and more.
The worst of both worlds has happened — Covid sales have fallen off a cliff and no blockbuster has yet been developed to take their place. Revenue has gone from $19bn in 2022 to an expected $1.5bn-$2.5bn this year. That wide range tells us that demand is very uncertain.
Something I didn’t foresee was the election of Donald Trump and the subsequent appointment of vaccine sceptic Robert F Kennedy Jr as health secretary. mRNA vaccine technology appears to be directly in the administration’s firing line, so this is adding more risk.
Of course, politics is outside Moderna’s control. It had its second product — for respiratory syncytial virus (RSV) in adults aged 60 and above — approved last year, but it hasn’t been selling well.
Nevertheless, the company has ambitious plans to launch 10 products by 2027. And its potentially groundbreaking personalised cancer vaccine is currently in a Phase 2/3 trial for melanoma in collaboration with Merck.
Losses are expected for years, but Moderna did still have $9.5bn in cash at the end of 2024. It’s in no immediate danger.
I’m going to hang onto my shares and ride out the vaccine-related political storm. But it’s a long way back from $32.
Weight-loss woes
The second stock stinking out my ISA is Novo Nordisk (NYSE: NVO). It’s down 10% in 2025 and 38% over the past six months.
Novo Nordisk is a diabetes care giant that’s also behind the blockbuster GLP-1 drugs Ozempic and Wegovy. These have been selling like hotcakes, but a recent phase 3 trial to find a significantly better weight-loss treatment fell short.
Meanwhile, competition is heating up from weight-loss rival Eli Lilly, while Roche is attempting to muscle its way into this lucrative space. So rising competition is a risk worth monitoring.
Unlike Moderna though, I’m confident this stock will bounce back. Novo has high margins, strong R&D investment, and a powerful market position with Ozempic and Wegovy.
Indeed, surveys show that many patients specifically request these by name, rather than asking about ‘GLP-1 drugs’ generally. The firm recently launched a direct-to-consumer platform that allows eligible patients to purchase Wegovy online for $499 per month.
Finally, the stock is trading at an attractive 19 times forward earnings, while offering a 2.1% dividend. I’m more likely to buy additional shares than sell at that valuation.
