Moderna (NASDAQ:), one of the most beloved stocks this year, has lost some of its charm. Stocks are now under pressure as many analysts warn that the rally in the COVID vaccine producer has gone too far.
After hitting $493.76 in early August, the stock has lost more than 20% of its value in the past two weeks. The stock closed at $400.30 yesterday, valuing the Massachusetts-based company at nearly $160 billion.
This rating puts Moderna in the same league as global pharmaceutical giants such as Bristol-Myers Squibb (NYSE:), GlaxoSmithKline (NYSE:), as well as the retail chain CVS Health (NYSE:).
A key consideration for investors right now is: should they buy Moderna now given the recent slump?
The answer to that question depends very much on the path the global health crisis takes and the company's success in going beyond vaccines and unlocking the full potential of mRNA technology – on which the COVID vaccine is based. as a remedy for other diseases. For now, many analysts think that Moderna's current rally has run its course.
Moderna tops the list of stocks that analysts believe will fall the most this year, according to an analysis by CNBC.com.
In a recent note, Oppenheimer analysts said:
“We continue to value the underlying mRNA story, technology and management execution. However, a rapidly growing appreciation has surpassed our current understanding of the breadth and depth of this promising story.”
More breakthroughs
In addition to the COVID-19 pandemic, Moderna executives are optimistic that their technology will bring a cure for other respiratory infectious diseases, such as respiratory syncytial virus (RSV); and cytomegalovirus (CMV); as well as other potential therapies for conditions, including cancers and inflammatory diseases.
Betting on other breakthroughs may not yield windfalls as quickly as the emergency authorization for the COVID vaccines. Most of Moderna's experimental vaccines are still in the early stages of human trials, except for the cytomegalovirus injection. That could become a multi-billion dollar product if it works. Moderna also plans human trials this year for a vaccine against the Epstein-Barr virus, which causes mononucleosis.
Moderna reported this month that it exceeded Wall Street expectations, earning about $6 billion in sales of COVID-19 vaccines in the first half of the year. It has already signed $12 billion in advanced purchase agreements — with an additional $8 billion in options — for its coronavirus vaccine next year.
Oppenheimer and some analysts believe that these sales forecasts are already reflected in the share price and that there is no point in betting on further gains. Geoff Meacham, director of BofA Securities, said in a recent note that Moderna would need a 100% chance of success for its entire pipeline to justify its rise.
Ia Wall Street Journal report Meacham said:
"Everyone believes everything in the pipeline will be similar to COVID and you can get it done in a few years. I think COVID was by far a unique situation that they really crushed."
According to consensus estimates published on Investing.com, analysts are dividend on the upside ahead. Of the 17 analysts surveyed, seven recommend buying the stock, while an equal number of forecasters are neutral. The consensus price target for 12 months shows an additional 27% of the stock's current value.
Source: Investing.com
Moderna traded on Thursday at nearly 49 times earnings over the past 12 months, compared to nearly 27 times earnings for the S&P 500.
Oppenheimer added in his note:
"We note that as the mRNA pipeline progresses, particularly across other modalities, we may become constructive again. For now, we will see the dream unfold from the sidelines."
Bottom Line
Recent comments from Wall Street analysts suggest that Moderna has already reached its peak in the current cycle and that future earnings depend heavily on a number of unknown factors, such as the path the pandemic takes and the success of the others. medicines.
