Moderna's Stock Valuation Goes From 'Unreasonable To Ridiculous': Analyst

Moderna, Inc. (NASDAQ: MRNA) shares have rallied since the start of July, rendering the valuation unattractive and "ridiculous," according to a BofA Securities analyst. 

The Moderna Analyst: Geoff Meacham maintained an Underperform rating on Moderna with a $115 price target.

The Moderna Thesis: At a roughly $200-billion market value, Moderna has eclipsed pharma industry veterans Merck & Co., Inc. (NYSE: MRK), Bristol-Myers Squibb Company (NYSE: BMY) and Amgen, Inc. (NASDAQ: AMGN), Meacham said in a Tuesday note. 

The latter three companies, the analyst said, are therapeutics businesses with proven long-term track records and deep/ diversified late-stage pipelines. 

Related Link: The Week Ahead In Biotech (Aug. 8-14): Jazz Pharma FDA Decision, Earnings Deluge and IPOs In The Spotlight

To justify Moderna's $200-billion valuation, the company needs to sell 1.5 billion doses of COVID-19 vaccine each year from 2022 through 2038, and its entire pipeline must succeed with aggregate peak sales of $30 billion, Meacham said.

"These assumptions are, in our view, impossible to justify," the analyst said.

A $485 fair value for the share would require cumulative COVID-19 vaccine sales of $340 billion through 2038, contributing $280 per share, and a pipeline value of $170 per share, which represents a 100% success rate for four Phase 2 programs, 10 Phase 1 programs and 8 preclinical programs, he said. 

Feedback from infectious disease experts, Meacham said, provides support for a skeptical longer-term view of COVID-19 vaccines, even with the emergence of variants like delta.

MRNA Price Action: At last check, Moderna shares were down 5.69% to $456.88. 

Related Links:

Attention Biotech Investors: Mark Your Calendar For August PDUFA Dates

How to Buy Moderna (NASDAQ: MRNA) Stock