Moderna’s (MRNA) opportunity to halt the spread of Covid-19 made the biotech company one of 2020’s star performers. The opportunity was well-taken, and while in the West the pandemic is retreating, MRNA stock is still benefiting – shares are up 46% year-to-date.
That said, the stock came under pressure last week from a dual attack.
First off, the Biden administration’s new trade envoy Katherine Tai said she liked the World Trade Organization’s (WTO) proposal that would make void COVID-19 vaccines’ intellectual property rights – bad news for Moderna and its fellow vaccine makers.
Then, Moderna reported Q1 earnings. The company delivered EPS of $2.84 per share, handily beating Wall Street’s estimate for earnings of $2.39 per share and amounting to the company’s first profitable quarter ever.
And while the company generated revenue of only $8 million a year ago, the 1Q21 top line grew to $1.9 billion.
So, what’s the problem, you say? Well, despite the massive jump, investors did not like the fact revenue came in just below the Street’s forecast of $2.04 billion.
However, Oppenheimer’s Hartaj Singh sees little to be worried about. In fact, quite the opposite.
“While investors chose to focus on the red herring of loosening of mRNA vaccine intellectual property in the pandemic and a 1Q21 miss on revenues, MRNA continues to focus on its underlying business, growing its COVID-19 vaccine strategies (boosters, variants, lower dose COVID-19 vaccines, etc.) and furthering its pipeline,” the 5-star analyst opined. “As such, the company—which now has >2x its employees since the pandemic began in 1Q20 —is investing significant resources into manufacturing and intellectual and physical bandwidth.”
As far as the intellectual property issue is concerned, Singh says that in biological systems, mRNA vaccine manufacturing is akin to “rocket science.” Worldwide (WW) manufacturing capacity, he says, will hardly be affected by “temporarily liberating the patents.”
“What is likely needed is governmental support for current manufacturers to further access raw material supplies, as opposed to fragmenting them,” the analyst added.
While Singh might have a bone to pick with the government’s support of Moderna and its ilk, his own backing remains resolute. The analyst rates the stock an Outperform (i.e. Buy) and sticks to a $206 price target. The implication for investors? Upside of 35%. (To watch Singh’s track record, click here)
Looking at the consensus breakdown, the rest of the Street shows a variety of opinions. The stock’s Moderate Buy consensus rating is based on 6 Buys, 4 Holds and 2 Sells. The average price target, at $174.18, it is set to generate returns of 14% over the next 12 months. (See Moderna stock analysis)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
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.
