Moderna Analyst: Unrealistic COVID-19 Vaccine Expectations Create Unfavorable Setup

Coronavirus vaccine developer Moderna Inc's (NASDAQ: MRNA) stock was moving lower Monday after a downgrade from BofA Securities. 

The Moderna Analyst: Geoff Meacham downgraded Moderna shares from Neutral to Underperform and maintained a $150 price target.

The Moderna Thesis: Moderna shares have seen an extended rally, rising 425% in 2020 and an incremental 66% year-to-date, Meacham said in a Monday note.

The shares have now catapulted to levels that are increasingly difficult to justify on a fundamental basis, the analyst said. 

The gains have come despite rival vaccine candidates from Novavax, Inc. (NASDAQ: NVAX) and Johnson & Johnson (NYSE: JNJ) moving toward approval by the FDA in the near term, he said. 

The Moderna and Pfizer Inc. (NYSE: PFE)-BioNTech SE – ADR (NASDAQ: BNTX) vaccines may have best-in-class efficacy, but the volume and lower price points from Novavax, J&J, AstraZeneca plc (NASDAQ: AZN) and others will likely affect cumulative sales expectations for Moderna, Meacham said. 

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For supporting a valuation over $180, Moderna should generate more than $85 million in cumulative COVID-19 vaccine sales, the analyst said, adding that this is reflected in the share price at current levels.

BofA's $150 price target already implies significant mRNA-1273 upside at $47 billion over the next 10 years, concentrated primarily in 2021-2023, he said. 

Additionally, consensus expectations for Moderna's vaccine sales are unrealistic, Meacham said. 

"These factors, together with a pipeline that is still too early to compensate for declining vaccine sales (CMV launch in 2024e), creates an unfavorable setup for MRNA shares." 

MRNA Price Action: At last check, Moderna shares were slipping 8.99% to $157.60. 

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