If you had to choose an all-out success story of the Covid era, Moderna (MRNA) would be high up on anyone’s list. An unknown company outside industry circles prior to the pandemic’s onset, the biotech is now a household name after its Covid-19 vaccine mRNA-127 has been approved for use in many regions across the globe.
Hand in hand with the real-world success has been ample reward from the market. After 2020’s massive shares gains, the stock is up 200% year-to-date. The latest leg up came after the ultimate Wall Street seal of approval.
As of July 21, the company will join the exclusive list of companies that make up the S&P 500 – the stock market’s bellwether index. The news sent the shares to another all-time high.
While the latest share price peak is no doubt great for investors, Jefferies’ Michael Yee notes Moderna’s valuation has crossed the $100 billion mark and with uncertainty regarding the “booster tail,” the lofty figure probably prices in any other potential treatments in the pipeline.
Looking to the Q2 numbers, Yee actual predicts a “slight” beat. Moderna has guided for sales of 200-250 million doses of mRNA-1273 in the quarter. Yee’s forecast is at the guide’s mid-point – at ~225 million, and set to generate $5 billion, higher than the consensus estimate of ~$4.5 billion. To account for the US exercising its option on 200 million doses and the delivery of 110 million in Q4, the analyst thinks Moderna will likely raise 2021 guidance “again” from $19.2 billion to $21.2 billion.
Looking further ahead, Yee does expect “stockpiling” for 2022, but so far, the US has held off any big orders. With vaccines a politically charged subject in the US right now, Yee thinks this explains the administration’s reluctance to discuss the topic, with the top priority being to get everyone vaccinated.
“We think stockpiling orders will happen (booking big revenues) because it’s a no-brainer to be ready,” Yee noted, “But actual jabs might be 30-50% of what they were during the 2021 pandemic period, given many factors (debate on level of protection needed to boost and much less public fear in 2022).”
As for other non-covid developments, another possible catalyst for the shares could be from the readout of Phase 1 data from the company’s seasonal influenza vaccine candidate before the end of the year. Yee thinks these could “look very strong.”
Nevertheless, based on valuation, Yee reiterates a Hold rating on MRNA shares, along with a $250 price target. This figure implies ~20% downside from current levels. (To watch Yee’s track record, click here)
Overall, the Street’s take on Moderna presents something of a conundrum. The stock has a Moderate Buy consensus rating, based on 7 Buys, 4 Holds and 2 Sells. However, the $206.55 average price target implies shares will drop ~34% in the year ahead. It will be interesting to see if analysts make changes to their MRNA models shortly. (See MRNA stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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