Moderna Will Succeed, but Its Stock Already Reflects That, Says Needham


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Moderna stock has risen ninefold this year.

Joseph Prezioso/AFP via Getty Images

Needham Securities analyst Alan Carr expects Moderna’s vaccine for Covid-19 to get the nod on Dec. 17 from a panel of outside advisors to the U.S. Food and Drug Administration. That endorsement will be followed by an FDA emergency-use authorization and, in all likelihood, a pop in the stock.

But Carr thinks the stock (ticker: MRNA) is fully valued after its ninefold rise this year to a recent $170. On Wednesday, the analyst downgraded his rating from a Buy to a Hold, and pulled his price target of $110.

He expects a burst of revenue in 2021 from Moderna’s messenger-RNA vaccine for Covid-19, and subsiding sales in the years after.

“Moderna has made significant progress in 2020 toward validation of its mRNA platform,” wrote Carr. “The stock may react favorably to [emergency use authorization] issuance, but we don’t believe it will justify a meaningfully higher price target.”

In early trading Wednesday, Moderna stock slipped 3%, to $164.80, while the S&P 500 was marginally lower.

Moderna’s Covid vaccine performed exceptionally well in its clinical trials, and Carr is confident that it will get authorizations in the U.S., U.K., Europe and elsewhere. Another highly efficacious messenger-RNA vaccine from Pfizer (PFE) and BioNTech (BNTX) starting going into Britons’ arms this week. It will go before an FDA advisory committee Thursday, but Moderna isn’t far behind.

“[T]he company is essentially in a tie with Pfizer for first-to-market,” Carr says. He believes the two vaccines will satisfy most of America’s needs next year, with vaccines from AstraZeneca (AZN), Johnson & Johnson (JNJ), Sanofi (SNY), and Novavax (NVAX) filling gaps, if they are authorized.

AstraZeneca and J&J could report their trial results in January. If those other vaccines perform poorly in clinical trials, there may be opportunities for additional revenues for Moderna and Pfizer.

For now, Carr is expecting sales of 500 million doses next year for Moderna, generating $7.3 billion in Covid vaccine revenue, and earnings of $6 billion, or $13.60 a share. After the pandemic is tamed, he predicts that annual sales of Moderna’s Covid vaccine will taper off to $1 billion by 2025.

Although he expects a few hundred million in yearly sales, by then, from the company’s other vaccines and treatments for cancer and genetic disorders, Carr forecasts $1.4 billion in total revenue for 2025. That would produce 62 cents a share in earnings.

Moderna has validated its mRNA technology for vaccines and is in early clinical trials for shots against the cytomegalovirus, influenza, and a threat to infants called RSV. It has partnerships with Merck (MRK) and AstraZeneca on cancer treatments that are also in trials. Carr gives those programs a better-than 50% chance of success.

Data on these other product candidates from Moderna could prompt Needham to raise its valuation of the stock, as could disappointments from Covid vaccine rivals. But for now, Carr believes that Moderna’s $67 billion market capitalization already reflects its foreseeable success.

Write to Bill Alpert at