Why I think Rolls-Royce shares could have a big event ahead

Rolls-Royce (LSE:RR) shares are no stranger to big events. Shares of the jet engine maker caught many investors by surprise during the beginning part of the pandemic, for example. Rolls-Royce reported disappointing results. Shares of the stock trended lower.

In the last part of last year, Rolls-Royce shares again caught many investors by surprise. This time, the surprise was a positive one to many. When Pfizer and Moderna’s vaccines showed better-than-expected efficacy, Rolls-Royce shares rallied.

The surprises may not be over just yet. I think another potentially big event could await Rolls-Royce shares by early next week. Here’s why.

The potentially big event

I think a data release by Johnson & Johnson could potentially affect the Rolls-Royce share price. Johnson & Johnson CEO Alex Gorsky recently said of its Covid-19 vaccine candidate, “We look forward to sharing further details of our Phase 3 study by early next week”.

Pfizer already has a Covid-19 vaccine on the market that has a pretty high efficacy rate of around 95%. Nevertheless, I think Johnson & Johnson’s vaccine data release will be important.

First, Johnson & Johnson’s vaccine candidate reportedly may only require one shot. By contrast, Pfizer’s vaccine candidate requires two shots, with the efficacy rate of the first shot not being very high. A one-shot vaccine, if approved, would be more convenient for many people. In my opinion, it could improve overall Covid-19 vaccine uptake.

Second, data from earlier trials also suggests that Johnson & Johnson’s vaccine candidate could be easier to store and transport than Pfizer’s. If true, the vaccine could be useful in many emerging and developing markets with less infrastructure.

Also, because Johnson & Johnson has been manufacturing the vaccine in mass quantities for months already, the pharma giant will have a number of vaccines ready to be shipped if it gets approval from regulators. Those already produced vaccines, along with Johnson & Johnson’s huge manufacturing capacity, could make a fairly big difference in terms of fighting the pandemic. According to Johnson & Johnson’s reckoning, the company is on track to achieve its target of delivering one billion doses by the end of 2021.

How I think the event could affect Rolls-Royce shares

Here’s my thinking about the connection between Johnson & Johnson’s vaccine and the Rolls-Royce share price. If J& J’s vaccine is approved – and only takes one shot – it could really help speed up the number of people getting vaccinated. The world could potentially control the pandemic faster. Civil air travel could potentially rebound faster. And that would be good news for Rolls-Royce and its share price. 

In terms of how next week’s data release will affect Rolls-Royce shares, I don’t really know. Expectations are already pretty high. If Johnson & Johnson’s vaccine candidate results fail to meet expectations, I reckon Rolls-Royce shares could decline. If the results of the vaccine candidate beats expectations, on the other hand, I think there is potential for Rolls-Royce shares to rally.

As a long-term investor, what happens next week isn’t the whole story. Whatever Johnson & Johnson’s result may be, Rolls-Royce shares are definitely on my watchlist.