Moderna Surges as S&P 500 Inclusion Gives Vaccine Maker a Boost

(Bloomberg) -- Moderna Inc. jumped to a fresh record after S&P Dow Jones Indices said late on Thursday it plans to add the company to its benchmark index next week.

The Covid-19 vaccine maker rallied as much as 7.7% to $279.69 Friday as the company will replace Alexion Pharmaceuticals Inc. in the S&P 500 Index before the opening of trading on July 21. Alexion is set to be acquired by U.K. drugmaker AstraZeneca Plc.

Moderna shares have skyrocketed more than threefold over the past year with its coronavirus inoculation getting emergency use authorization in the U.S. in December, just a week behind the first approval for Pfizer Inc. and BioNTech SE’s vaccine. Earlier this week, its market valuation surpassed $100 billion, putting it in an elite group of biotech firms of that size.

Managers of index mutual funds and exchange-traded funds, who either track the S&P 500 or use it as a benchmark, could be looking at selling shares of other stocks listed on the gauge in order to add Moderna shares, potentially further propelling its gains this year.

The drug developer has rallied 165% so far this year, making it the top-performing stock on the Nasdaq 100 Index. Its meteoric rally thus far could put it at the top spot of the S&P 500 when it joins next week. The current best-performing stock on the benchmark is L Brands Inc., with a 100% surge.

To be sure, the average analyst price target for Moderna implies a more than 27% drop from its closing price on Thursday. That skepticism is focused on the biotech’s huge valuation and the fact that a late-stage study for its next product won’t begin until later this year.

Read more: Moderna’s Next Act Is Using mRNA vs. Flu, Zika, HIV and Cancer

The Cambridge, Massachusetts-based company also said its vaccinations are producing antibodies against the more easily transmitted delta form of the pathogen, though at a lower level than for the main virus. Moderna is also targeting new vaccines and drugs for other viruses like Zika and the flu as well diseases like HIV and cancer.

©2021 Bloomberg L.P.