Shares of Moderna Inc. are experiencing a concerning trend as they edge closer to breaking the record for consecutive declines, signaling growing investor apprehension regarding the deceleration of COVID vaccine sales.
UBS analyst Eliana Merle suggests that investors may be fixating too heavily on COVID-related issues in light of Pfizer Inc.’s recent sales warning. She points out that Moderna has reaffirmed its 2023 vaccine revenue outlook and highlights the potential undervaluation of the biotechnology company’s drug pipeline.
Maintaining her buy rating on Moderna stock (MRNA) since late June, Merle has slightly adjusted her 12-month stock-price target downward by 6.8% to $178 from $191. Nevertheless, her revised target still represents a notable 122% increase from current levels.
Although the stock initially fell by as much as 2.0% during intraday trading, it managed to pare losses and is currently down 0.6% in midday trading. This ongoing downward trend marks a worrisome nine-day losing streak, surpassing the previous record of eight straight losses that concluded on January 25, 2022.
In a recent note to clients, Merle, a highly regarded expert, shares insights on Moderna’s performance in the context of COVID vaccine revenues. While investors continue to closely monitor the trajectory of these revenues, caution remains prevalent in the market.
Even if expectations for annual COVID sales were halved and no revenue was anticipated from flu or respiratory syncytial virus vaccine sales, Moderna’s stock would still hold a value ranging from $50 to $55. Additionally, when factoring in potential peak sales from RSV and flu vaccines, the stock would see an increase, reaching approximately $85 to $93 in value.
Merle also highlights that Moderna’s broader pipeline beyond COVID is often “underappreciated,” particularly emphasizing the company’s latent virus portfolio. By considering the expected value of this pipeline, Merle raises her target for Moderna’s stock to an impressive $178.
Furthermore, Merle suggests that flu vaccines could serve as a vital element in Moderna’s long-term combination vaccine strategy. This strategic approach would notably improve the usage and adherence to COVID annual boosters. It is important to mention that Moderna is actively developing various combination vaccines, with the initial launch anticipated in 2025, most likely involving a COVID/flu combination.
In conclusion, Merle’s analysis reiterates the significance of COVID vaccine revenues for Moderna. However, it also highlights the potential for growth beyond the pandemic with a strong pipeline and combination vaccine strategy on the horizon.
Market Performance Comparison
As of the current year, Moderna’s stock has experienced a significant decline of 55.5%, contrasting with the Health Care Select Sector SPDR exchange-traded fund XLV, which has only slipped by 5.8%. In comparison, the S&P 500 SPX has recorded a gain of 10.4%.