This Is How Vaccines Are Distributed and Which Stocks Benefit

When the express shippers get the vaccines, they will send the doses packed in dry ice to pharmacies including CVS (CVS) and Walgreens (WBA), as well as doctors’ offices, mobile vaccination units, outpatient clinics, and other sites.

One vaccination kit contains about 100 vaccine doses.

UPS and FedEx have a history in health care. The UPS Healthcare division operates 128 facilities in 32 countries. FedEx, for its part, is using SenseAware ID, which the company describes as “a Bluetooth low-energy sensor device” that is attached to vaccine shipments, helping to make sure the temperature-sensitive packages arrive quickly and safely.

FedEx said it handles about 500,000 dry-ice shipments each month. Dry ice is required to keep the Pfizer vaccine at the ultralow temperatures it needs.

FedEx told Barron’s via email that it delivered its first shipment to a Massachusetts hospital before 6 a.m. Eastern time Monday. The company has made more than 80 deliveries since then.

“This is a historic moment and represents a monumental feat for vaccine development and expedient deployment,” said Mike McDermott, president of Pfizer Global Supply, in news releases from both FedEx and UPS. “Outstanding logistics is critical to get our products to those who need them across the country.”

Distribution is ultimately controlled by the federal government.

Information about vaccine allocations should eventually be available on the Health and Human Services website. HHS has posted allocations weekly for other Covid-19 therapies granted emergency-use authorizations. The department wasn’t immediately available to comment on when, or whether, a vaccine-allocation dashboard would go live.

Other companies have a role in vaccine distribution too. “We are actually delighted, honored and privileged to participate in this historic vaccine rollout,” said XPO Logistics (XPO) CEO Bradley Jacobs at a Credit Suisse investor conference in December. “The major pharma companies producing the vaccines are our customers.”

He added that the biggest beneficiaries will be FedEx, UPS, and DHL, a division of Deutsche Post (DPW.Germany), “but there’s plenty to go around for everybody else in the secondary market.” He was talking about shipping things such as syringes and saline solution, as well as temperature-controlled packaging materials.

For stocks, Cowen analyst Helane Becker believes vaccine distribution will benefit both FedEx and UPS, especially the former. Over the long term, ”there are further tailwinds [for FedEx] to vaccine distribution as the vaccine will need to be moved around the world and specifically to developing nations where logistics are more challenging,” she wrote.

Becker believes FedEx has unique expertise in that area. She rates FedEx shares at Buy and has a target of $290 for the stock price.

Investors will hear more about vaccine distribution shortly. FedEx reports its second-quarter earnings for fiscal 2021 on Thursday evening.

Wall Street analysts’ financial models point to $3.98 in per-share earnings from $19.4 billion in sales. This past year, in the comparable quarter, FedEx earned $2.51 a share from $17.3 billion in sales.

Vaccines might help to lift the companies’ profits, and potentially. their stock prices. But FedEx and UPS shares have had a good year so far. and vaccine distribution is a relatively minor factor compared with the explosion in e-commerce volume the pandemic has triggered.

The stocks are up 92% and 44%, respectively, so far in 2022. That is far better than either the S&P 500 and Dow Jones Industrial Average.

McKesson shares are up 26% year to date. XPO stock, for its part, has added 51%. CVS and Walgreens shares, however, are down 4% and 29%, respectively.

Write to Al Root at allen.root@dowjones.com