Why did Moderna plunge nearly 13% on Wednesday?
The US drugmaker’s share price fell sharply on Wednesday, after Covid-19 vaccine rivals Pfizer and BioNTech received their third regulatory approval.
- Moderna saw its share price plunge as much as 12.6% on Wednesday (09 December)
- The sell-off came as Covid-19 vaccine rivals Pfizer and BioNTech received their third regulatory approval
- Following that, the stock was downgraded to a ‘hold’ call by Needham analyst Alan Carr
- Carr believes Moderna’s rally has run its course and is now fully valued
Moderna stock price: What’s the latest?
Moderna shares closed 8% lower on Wednesday (09 December 2020), as Covid-19 vaccine rivals Pfizer and BioNTech received their third regulatory approval for use.
Canada on Wednesday became the third country, after the UK and Bahrain, to approve the use of Pfizer and BioNTech’s Covid19 vaccine candidate.
Following that, Moderna’s stock price sunk as much as 12.6% to an intraday low of US$149 a share, before recovering to finish the day at US$157.
Last Monday (30 November) the stock hit an all-time high price of US$178.50 a share, after the company said that its vaccine candidate, mRNA-1273, demonstrated a 94.1% efficacy rate in a late-stage clinical trial.
Why did one analyst downgrade Moderna to a ‘hold’?
A total of 19 Wall Street analysts have given the growth stock a consensus price target of US$109.17 and a majority ‘buy’ rating as of Wednesday (09 December).
Despite an overwhelming recommendation to accumulate the stock, Needham & Company’s Alan Carr downgraded his rating on Moderna to a ‘hold’ from a ‘buy’, while removing his previous US$110 price target altogether.
The analyst wrote: ‘Moderna has made significant progress in 2020 toward validation of its mRNA platform. The stock may react favorably to (emergency use authorisation) issuance, but we don’t believe it will justify a meaningfully higher price target.’
Carr predicts that while there would be a revenue spike in 2021 as a result of the vaccine, sales would gradually decline in the subsequent sales.
Nevertheless, he is confident that the stock will receive a solid boost next week, following an expected endorsement for mRNA-1273 from a panel of outsider advisors to the US Food and Drug Administration (FDA), who are scheduled to meet on 17 December.
This will then likely be followed by an emergency-use authorisation from the FDA.
And although Pfizer and BioNTech currently appear to be ahead in terms of the number of regulatory authorisations, Carr thinks Moderna ‘is essentially in a tie with Pfizer for first-to-market’ and that both vaccines will likely fulfill most of the US’ needs in 2021.
Revenue sustainability ‘remain in question’: BoA
Equally cautious was Bank of America analyst Geoff Meacham, who last week maintained a ‘neutral’ rating on Moderna’s stock, stating that long-term revenue sustainability from its Covid-19 vaccines ‘remain in question’.
Even in a bull case scenario and perfect market conditions, the estimated cumulative sales value of over US$85 billion attributed by the market is still a ‘stretch’, Meacham wrote in a note.
Market estimates that more than 150 million individuals will be revaccinated each year with the vaccine are also ‘questionable’, he added.
On the contrary, Meacham believes that as manufacturing scales up, demand is likely to outstrip supply in the next few years.
Finally, he wrote that Moderna’s Covid-19 vaccine will have to fetch a revenue of over US$85 billion in the next ten years, in order for its share price peak of US$178 to be justified.
Meacham has a price target of US$150 for Moderna.
How to trade US stocks with IG
Are you feeling bullish or bearish on Moderna and other US companies?
Either way you can buy (long) or sell (short) the asset using derivatives like CFDs offered on IG's industry-leading trading platform in a few easy steps:
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.