Shares of the blockbuster biotech
are starting the year with a surge after a rocky December.
Moderna (ticker: MRNA) shares were up 2% in premarket trading on Monday. The stock climbed 702% between January and November of last year, as Moderna emerged as the pacesetter in the race to develop a Covid-19 vaccine, but then tumbled in December. Shares fell 31.6% last month.
Now, Piper Sandler analyst Ted Tenthoff argues that investors should reconsider. In a note out Monday, Tenthoff said that the company’s pipeline of new treatments isn’t getting enough credit from investors. He also said the company’s Covid-19 vaccine could generate $7.8 billion in sales this year.
“We believe [Moderna shares] warrant a fresh look at a current market cap of $41 billion,” Tenthoff wrote in his Monday note. “Importantly, we believe Moderna’s rich pipeline is validated with multiple blockbuster vaccines in development.”
Tenthoff rates the stock Overweight, and has a target of $166 for the stock price. The shares closed at $104.47 on Thursday, and were trading at $106.57 early in the day.
The stock surge came as one federal vaccine official said Sunday that government scientists are in talks with the company about halving the doses of its Covid-19 vaccine given to some patients, as new cases of the disease continue to climb and the rollout of vaccines remains disappointingly slow. Speaking on the CBS news program Face the Nation, Operation Warp Speed chief adviser Moncef Slaoui said that using half as much vaccine in each individual would double the amount of vaccine available.
Moderna didn’t immediately respond to a request for comment on Monday morning about any discussions with Operation Warp Speed about halving doses.
Separarely, the company increased its base-case estimate for production of its Covid-19 vaccine, saying it expected to make 600 million doses this year. It had previously estimated production would be 500 million doses.
On Thursday, Moderna said it had signed an agreement with the South Korean government to supply 40 million doses of the Covid-19 vaccine, beginning in May.
In his Monday note, Tenthoff wrote that Moderna’s Covid-19 vaccine will generate a profit in 2021. He said that more than 500 million doses of the vaccine have been ordered, a figure that could translate to revenues of $7.8 billion.
He said that the sales help validate the rest of the company’s pipeline, much of which uses the same building blocks as the Covid-19 vaccine.
“Importantly, [Moderna’s Covid-19 vaccine] has generated a strong balance sheet and positive near-term cash flow that will pay for development of these additional potential blockbuster vaccines,” Tenthoff wrote.
In its statement Monday updating its production estimate, Moderrna said it now expects to produce 600 million doses of its Covid-19 vaccine this year, with 100 million doses to be delivered to the U.S. by the end of the first quarter, and a total of 200 million in the first half of the year. It said that it has delivered 18 million doses to the U.S. government so far.
Shares of Moderna are up 453% over the past twelve months. FactSet tracks 16 analysts who cover the stock. Half rate it a Buy, six call it a Hold, and two consider it a Sell.
Write to Josh Nathan-Kazis at firstname.lastname@example.org