Moderna, Inc. MRNA shares declined nearly 13.2% on Sep 8, following a rating downgrade by an analyst at SVB Leerink. The analyst downgraded the company from “MARKET PERFORM” to “UNDERPERFORM” and reduced the target price from $58.00 to $41.00. The analyst made the downgrade on concerns related to potential competitive pressure for Moderna’s coronavirus vaccine candidate, mRNA-1273, from vaccine candidates of other companies.
The analyst stated in its report that Moderna’s coronavirus vaccine candidate represents majority of potential revenue opportunity for the company. The report also stated that the company’s mRNA-1273 has high probability of getting an emergency use authorization from the FDA in the fourth quarter. mRNA-1273 was the first vaccine candidate to begin phase III development. However, coronavirus vaccine candidates of Pfizer PFE/BioNTech BNTX and AstraZeneca AZN/Oxford University are also now in late-stage development. Meanwhile, Moderna’s competitors have signed deals to supply significant doses of their vaccines to several countries across the globe. These factors have blurred Moderna’s prospects, leading to its downgrade.
We note that AstraZeneca paused the global late-stage clinical studies on its coronavirus vaccine candidate earlier this week, following an unexplained illness of a study participant. This may lead to delay in the development of the candidate and give Moderna a breather.
Shares of Moderna have surged 177.8% so far this year against the industry’s decrease of 3.5%.
Meanwhile, leaders of nine pharma companies involved in developing a coronavirus vaccine pledged that they will pursue approval for their vaccine candidates only upon meeting efficacy and safety criteria in their late-stage clinical studies. The companies are Moderna, AstraZeneca, GlaxoSmithKline, Johnson & Johnson, Merck, Novavax, Pfizer, BioNTech and Sanofi. There are rumors that there is pressure to bring a vaccine to the market before the presidential elections on Nov 3.
Although the pledge does not mean that there will be no vaccine by year-end, it suggests that there may be delay in developing a safe and effective vaccine.
We note that more the delay in commercializing vaccines, more will be the competitive pressure on Moderna’s mRNA-1273.
We also note that Sanofi is reportedly looking to price its vaccine below 10 euros ($11.80). Reportedly, AstraZeneca is also likely to price its vaccine at a similar price. However, Moderna’s vaccine is estimated to be priced around $50, making it much costlier that its competitors, which can lead to reduced demand. On the other hand, a price cut for the vaccine will significantly dent Moderna’s future revenues
Zacks Rank
Moderna currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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