Pfizer, Moderna Analysts Respond To FDA COVID Booster Ruling: 'Revenues Will Decline'

The Food and Drug Administration’s panel of independent vaccine experts recently voted 19 to 2 to recommend a new batch of COVID-19 booster shots targeting the omicron variant this fall.

The news, announced Tuesday, June 28, could have a big impact on the share prices of vaccine makers.

Several Wall Street analysts have weighed in on what the new FDA ruling means for Pfizer Inc. PFE, BioNTech SE - ADR BNTX and Moderna Inc MRNA.

What Happened? In response to mutations in the omicron variant that make COVID-19 more contagious, the FDA has said vaccine makers need to modify their formulas to specifically target omicron ahead of an anticipated uptick in COVID-19 cases starting in the fall. As natural and vaccination immunity from previous shots fade, an omicron-targeted vaccine could provide more durable protection.

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Unfortunately, Pfizer and Moderna both developed their omicron COVID-19 vaccines to target the original BA.1 omicron variant. BA.1 is no longer circulating in the U.S., while the BA.4 and BA.5 variants are rapidly becoming the most dominant omicron variants. Pfizer and Moderna have both reported omicron vaccine data showing impressive efficacy against the BA.1 variant, but limited effectiveness against BA.4 and BA.5.

Voices From The Street: On Wednesday, Morningstar analyst Karen Anderson said Moderna and BioNTech remain the market leaders in mRNA-based vaccines, but the door is still open for Novavax, Inc. NVAX and Sanofi SA SNY.

"While Novavax and Sanofi are also developing bivalent and omicron-adapted boosters that could be available in late 2022, we think the mRNA firms still have an edge when it comes to adaptability and speed of manufacturing, due to their manufacturing capacity ramp during the pandemic, as well as the general flexibility of mRNA technology," Anderson said.

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Anderson said the FDA ruling does not impact her Buy rating or $232 fair value estimate for Moderna or her Buy rating and $205 fair value estimate for BioNTech.

Bank of America analyst Geoff Meacham said the FDA ruling is likely not a significant catalyst for Pfizer or Moderna.

"We do not see the booster market as a significant growth driver for either company, as we believe vaccine revenues will continue to decline as COVID-19 moves into an endemic phase," Meacham said.

Bank of America maintains a Neutral rating and $254 price target for BioNTech, a Neutral rating and $180 target for Moderna and a Buy rating and $70 target for Pfizer.

SVB Securities analyst David Risinger said this week that the U.S. government will likely purchase additional doses of the Pfizer bivalent omicron vaccine, but vaccine upside is limited at this point.

"Core business prospects excluding transactions are uninspiring, and it is extremely difficult to predict the company’s earnings power as COVID-related sales decline after 2022," Risinger said.

SVB Securities has a Market Perform rating and $55 target for Pfizer.

Benzinga's Take: Each additional round of booster shots and FDA recommendations is certainly good news for vaccine makers Moderna, Pfizer and BioNTech. However, mush of these vaccine sales are already priced into the stocks, and analysts seem to see diminishing returns on COVID-19 sales in the years ahead.

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