Moderna’s Vaccine Is Close to Getting a Thumbs-Up. Its Stock Is Taking a Hit.
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A Moderna sign is displayed on a shelf during clinical trials for a Covid-19 vaccine.
Eva Marie Uzcategui/BloombergModerna is close to supplying Americans with the second vaccine for Covid-19, after Thursday’s endorsement of the company’s shots by a panel of expert advisors to the U.S. Food and Drug Administration. The FDA is likely to grant an emergency use authorization to the vaccine within a day—as it did after the Dec. 10 advisory vote in favor of Pfizer and BioNTech’s vaccine.
Investors sold on the good news. Friday morning, Moderna stock (ticker: MRNA) opened down 3% at $139.
The vaccine would be the first product delivered by Moderna, and sales of it could bring in more than $8 billion in revenue next year. But even after the stock’s retreat from the record of $178.50 reached on Dec. 1, the market now values the biotech firm above $55 billion.
That reasonably accounts for all the revenue the Moderna can expect from the Covid-19 vaccine and the other products in its pipeline, said Morgan Stanley’s Matthew Harrison, in a Wednesday note downgrading his rating on the stock from Overweight to Equal Weight. He thinks that Moderna’s prospects would be fairly valued at his target price of $150 a share.
Morgan Stanley’s advice to take profits on Moderna’s triumph aligns with other brokers who have been moving to the sidelines. There have been recent downgrades by analysts at BMO Capital Markets, Jefferies, and Needham.
Downgrades also followed the FDA’s Dec. 11 authorization of the country’s first Covid vaccine from Pfizer (PFE) and BioNTech (BNTX), with RBC Capital Markets moving to a Hold on Pfizer. The inventor of Pfizer’s vaccine, BioNTech, shot to a market cap of $25 billion. Analyst Robert Burns at H.C. Wainwright reiterated his Neutral rating on BioNTech in a Friday update. He noted the start of pivotal clinical trials for a Covid vaccine by another rival, CureVac (CVAC), which is pursuing a variation of the messenger-RNA approach used by BioNTech and Moderna.
In Friday morning trading, Pfizer stock edged down 0.6% to $37.80, while BioNTech traded down 1% to $105.
At Morgan Stanley, analyst Harrison believes that Moderna’s future is bright. The stock’s moves in the next year are likely to be dominated by the sales and expectations for Covid-19 vaccine sales, which Harrison expects to provide $10 billion to $20 billion in cash for Moderna’s development of cancer treatments and other vaccines that use its messenger-RNA technology.
However, sales of Moderna’s Covid vaccine will encounter competition and reduced need, after 2021, warns Harrison. The recent stock price well appreciates the company’s Covid opportunity, he concludes. So he moved to the sidelines with his downgrade.
Write to Bill Alpert at william.alpert@barrons.com