Investors of Moderna (MRNA) slept soundly last weekend, as shares ended each session in the green during the week. Saving the best for last, on Friday July 17, Moderna posted a 16% uptick after it was revealed that the European Union (EU) might purchase Moderna’s experimental COVID-19 vaccine. The latest surge has sent the stock to a record high, having added 310% of muscle since the turn of the year.With a Phase 2 study currently in progress, and a Phase 3 trial of mRNA-1273 set to begin on July 27, Oppenheimer analyst Hartaj Singh sees a rocky path ahead, yet remains optimistic.“MRNA's valuation, in our view, is reflecting an approval and fast uptake of mRNA-1273, in line with other historical biotech comps. Pricing dynamics, potential donation of free vaccine and distribution of mRNA-1273 are non-trivial issues. We believe these can be navigated, but transit could be choppy. As the leader in the COVID-19 vaccine space, we continue to find MRNA attractive,” said the 5-star analyst.Should mRNA-1273 gain approval, which is by no means a certainty and given a 50% probability of success by Singh, it is expected to generate sales of $5 billion by 2023. However, in order for that to become a reality, there are “many hurdles that MRNA needs to navigate over the next 3-6 months.”These hurdles include the drug’s pricing. Other big pharma names such as Johnson & Johnson and AstraZeneca have said they might distribute their vaccines “at cost” while the virus still rages on. Additionally, with Moderna’s use of shareholder capital to produce mRNA-1273 “at risk,” this means “threading the pricing needle for mRNA-1273 will require finesse.” Add into the mix the possibility that the vaccine might be donated to developing countries - like Gilead has done with its viral treatment, remdesivir - and pricing becomes further complicated.Lastly, there are the distribution logistics. Singh believes Moderna will “work closely with US governmental and international agencies to distribute mRNA-1273 in an equitable manner,” and might even search for a partner to work with on the commercial side.Despite the variables, all in all, Singh concludes these are “high-quality problems, and we continue to find MRNA attractive.”Therefore, Singh reiterated an Outperform rating along with a $108 price target. There’s 33% upside in the cards, should Singh’s target be met over the next 12 months. (To watch Singh’s track record, click here)What does the rest of the Street make of the high-flying biotech’s prospects? Based on 13 Buys and 3 Holds, Moderna has a Strong Buy consensus rating. In addition, the $93.79 average price target implies upside potential of 17%. (See Moderna stock analysis on TipRanks)To find good ideas for healthcare stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
No comments:
Post a Comment