Moderna Analyst Says Odds Are Good For COVID-19 Vaccine Approval, But Valuation Overcooked

Moderna Inc's MRNA coronavirus vaccine in development — mRNA-1273 — continues to inspire confidence among sell-side analysts.

The Moderna Analyst: SVB Leerink analyst Mani Foroohar initiated coverage of Moderna with a Market Perform rating and $65 price target.

The Moderna Thesis: The intense unmet need and the political will to get one or more vaccines approved are likely to sway regulators into showing substantial flexibility for vaccine candidates against SARS-CoV-2, the virus that causes COVID-19, Foroohar said in a Thursday initiation note. (See his track record here.)

"As a result, odds of approval for MRNA-1273 and competing therapies are high, even if pivotal clinical datasets show some inadequacies or inconsistencies," the analyst said. 

Initial demand for the vaccine should be robust, he said.

SVB Leerink's base case estimates are modestly above the consensus for 2021. 

Medium- and long-term expectations are unlikely to be met unless Moderna shows a best-in-class profile, Foroohar said.

This is an unlikely proposition for Moderna, given its many competitors, including big biopharma players pursuing mRNA strategies similar to Moderna's, the analyst said. 

SVB Leerink also sees commoditization risk even in the face of excellent data, as many companies are entering the market in a short time — and considering the early price point implied by Pfizer Inc. PFE/BioNTech SE's – ADR supply agreement with the U.S. government.

This scenario implies a price target of $19 per share attributable to Moderna's vaccine program, Foroohar said. 

While being optimistic about Moderna's mRNA-1273, the analyst said he's uncomfortable with Moderna's valuation, even after ascribing value to a dozen programs, many of which are quite early.

"Without major pipeline catalysts to counterbalance competitive risk to MRNA-1273, we view risk/reward as unappealing at this valuation." 

MRNA Price Target: Moderna shares were trading down 3.17% at $80.59 at last check Thursday. 

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