Moderna Analyst Questions Whether COVID-19 Opportunity Can Support Valuation

Moderna Inc's MRNA coronavirus vaccine program is proceeding smoothly, with emergency use authorization likely as soon as late December. 

The Moderna Analyst: BofA Securities analyst Geoff Meacham reiterated a Neutral rating on Moderna shares and increased the price target from $105 to $150.

The Moderna Thesis: While Moderna's pipeline is promising, the sustainability of COVID-19 revenue in the longer term is still in question, Meacham said in a Thursday note.

BofA also tempered any broad read-across of the COVID-19 prospects to the rest of pipeline, the analyst said. 

The firm's updated base case assumes $10 per share in cash, $62 per share in non-COVID-19 value and $78 per share in COVID-19 vaccine revenue, he said. 

Even in a bull case where mRNA-1273 is broadly available globally, with limited competition and manufacturing constraints, the cumulative sales value of over $85 billion attributed by the market is a stretch, Meacham said. 

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Any value realized should come from bulk contracts, where the company will face limited pricing power and negative optics from overcharging, especially as additional vaccines are approved, the analyst said. 

The Street estimates assume that more than 150 million individuals will be revaccinated each year with mRNA-1273, which is also questionable, he said.

The manufacturing scale-up could pose problems, with demand likely to outstrip supply for the next few years, Meacham said. 

In order for valuations to be warranted at the share price peak of $178, either the COVID-19 vaccine should fetch cumulative revenue of over $85 billion between now and 2030, or the vaccine approval should substantially derisk the rest of Moderna's pipeline, according to BofA.

The latter possibility is difficult given the lack of concrete data, the firm said. 

MRNA Price Action: At last check, Moderna shares were advancing 5.48% to $150.84. 

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