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With a potential coronviaurs vaccine on the horizon, stocks that hinge on the reopening of the economy could really flourish, especially those that aren't yet pricing in the chance of a successful drug, according to Morgan Stanley.
"Once a vaccine is widely disseminated, we expect to see significant pickup in activity," Morgan Stanley equity analyst Thomas Allen told clients. "We looked at activity-based industries and companies that have been severely impacted by COVID to determine which are potentially dislocated once a vaccine is widely available.
Over the next few months drugmakers will reveal important information about a working vaccine, production capabilities and effectiveness. Between Pfizer and BioNTech, Moderna and AstraZeneca, pivotal vaccine data is set to be released in the final quarter of 2020. In October, the FDA is scheduled to discuss parameters for authorizing a coronavirus vaccine and how the treatment will be rolled out to the public. Morgan Stanley's base case is for a Covid-19 vaccine to arrive by the first or second quarter of 2021.
Morgan Stanley said while some sectors may experience long-term structural headwinds from the pandemic, others may see tailwinds.
"We see the Restaurants and Sports sectors as cheapest vs. history while Business Services and Cruise look the most expensive," said Allen.
The Wall Street firm looked at individual stocks in these sectors to come up with the stocks with the most upside with a potential vaccine.