Last week, Moderna’s (MRNA) Covid-19 vaccine candidate mRNA-1273 became the second approved vaccine in the U.S. after it received emergency-use authorization from the FDA. And on Tuesday, the National Institute of Allergy and Infectious Diseases (Niaid) Director Anthony Fauci was administered the first dose of the vaccine live on TV.
However, countering the good news, coronavirus stocks have come under pressure this week over worries the current batch of vaccines won’t be effective against a new Covid-19 strain which has recently emerged in the UK.
Moderna is currently testing its vaccine against the new fast-spreading variant, but Wall Street’s most prominent Moderna bear remains skeptical about the stock’s prospects.
Whether the vaccine proves effective against the new strain or not, it makes little difference to Leerink analyst Mani Foroohar.
The analyst reiterated an Underperform (i.e. Sell) rating on MRNA shares along with a $69 price target. This figure implies a steep 47% descent from current levels. (To watch Foroohar’s track record, click here)
Simply put, Foroohar believes Moderna’s “current valuation and consensus estimates” have all the goodness already baked in, which therefore skews “risk/reward sharply to the downside.”
The analyst expects the stock to “remain volatile as investor debates on commercial and execution risk come to the fore.”
Moderna’s problem is further exacerbated by several other factors, says the analyst. MRNA-1273 represents the “bulk of the company’s revenue opportunity,” and is the “key driver of share performance.”
Furthermore, the effort to combat the virus is a worldwide concern which is likely to result in additional pressure from multiple sources.
“As we are in the midst of a global buildout of capacity analogous to a Manhattan project for vaccines,” Foroohar summarized, “We see excess capacity, high competitive intensity, and limited pricing power as likely long-term structural features of vaccine end-markets, presenting secular challenges to a sub-scale player such as MRNA.”
What does the rest of the Street think? Looking at the consensus breakdown, opinions from other analysts are more spread out. 7 Buys, 7 Holds and 2 Sells add up to a Moderate Buy consensus. In addition, the $148.31 average price target indicates ~14% upside potential. (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.
