How To Play Moderna Stock Ahead Of Key FDA COVID-19 Booster Shot Ruling

Moderna Inc MRNA shares traded higher by 2% on Tuesday after U.S. Food and Drug Administration scientists opted not to take a stance on the company’s COVID-19 vaccine booster shot.

What Happened: In a new 45-page document, the FDA said data suggests two doses of the Moderna COVID-19 vaccine are enough to protect against the virus.

Related Link: Is Johnson & Johnson's Stock Overvalued Or Undervalued?

“Overall, data indicate that currently U.S.-licensed or authorized COVID-19 vaccines still afford protection against severe COVID-19 disease and death in the United States,” the FDA said.

Why It’s Important: The decision comes after the FDA similarly didn’t take a stance on the COVID-19 booster shot from Pfizer Inc. PFE last month.

The FDA’s Vaccines and Related Biological Products Advisory Committee subsequently rejected Pfizer’s plan to distribute booster shots to everyone over the age of 16, but recommended the boosters for those most vulnerable to the coronavirus, including the elderly. The committee will meet on Thursday to officially review Moderna’s booster shot.

On Tuesday, Bank of America analyst Geoff Meacham said Moderna’s 30% sell-off from September highs is a “long overdue reversion to fundamental value” for the stock. He said booster shot approval could potentially be a near-term bullish catalyst, but he believes about $5 billion in annual booster shot sales starting in 2022 are already baked into the stock’s current valuation.

In addition, Meacham said supply constraints could limit the near-term financial impact of a Thursday approval.

“Finally, with the emergence of highly effective orals (Merck; potentially Pfizer, Roche), we wouldn't be surprised to see a preference for this modality over the recurring cycle of vaccine boosters/quarantine post-exposure,” Meacham said.

Bank of America has an Underperform rating and a $135 price target for MRNA stock.

Benzinga’s Take: The most likely outcome for the Moderna booster shot is probably that it will be granted approval for the same populations greenlighted for the Pfizer booster shot. But as Meacham suggested, the question for Moderna investors is how much booster shot value has already been priced into the stock, which is still up more than 1,500% since the beginning of 2020.

Photo: Ian Hutchinson via Unsplash