In solidarity with the selloff in the biotech space, Moderna (NASDAQ:MRNA) has lost more than 41% YTD, becoming the sharpest decliner in the S&P 500, notwithstanding a promising preannouncement on 2022 COVID-19 vaccine sales issued early this month.
With its shares having lost more than two-thirds of the peak valuation in August, investors and analysts are becoming increasingly bullish on the prospects of Cambridge, MA-based firm. This month, two Seeking Alpha contributors issued back-to-back Buy recommendations on Moderna (MRNA) for the first time since November.
Wall Street analysts seem to agree, as indicated in the rating history for the stock for the past month. An attractive valuation at current levels was the main driver for a recent upgrade at Deutsche Bank and a target hike at Bank of America.
While Deutsche Bank noted that a possible transition of the pandemic to an endemic status would favor Moderna (MRNA), UBS analysts disagreed, warning that such an endgame to COVID-19 could hurt its prospects.
However, the industry trajectory is not in Moderna’s (MRNA) favor. With the emergence of less severe Omicron, the projections for COVID-19 vaccine sales are likely to drop in 2022 from the previous year, according to a recent report by Airfinity. Yet, with a broad pipeline based on a proven platform and $17B in cash in the balance sheet, it won’t be long before Moderna (MRNA) transforms from a one-product company.
Meanwhile, BioNTech (NASDAQ:BNTX), Pfizer’s (NYSE:PFE) partner in COVID-19 vaccine development, is not much different except in terms of valuation. With Moderna (MRNA) trading at a 50% premium to the German vaccine maker’s current forward non-GAAP P/E ratio of ~4.0, the trading multiples of the two rivals indicate further downside for the U.S. company.