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Why are analysts split on Moderna?

Moderna shares came under sell-off pressure in the last one week amid patent protection waiving talks. Despite this, some analysts remain bullish on the stock, thanks to the company’s latest guidance.

Source: Bloomberg
  • Moderna Inc (NASDAQ: MRNA) share price stays down a week after the US government indicated its support for the lifting of Covid-19 vaccine patent protections
  • The company announced on Wednesday (12 May 2021) a new supply agreement with the Australian government for 25 million doses
  • Despite the ongoing sell-off, two analysts raised their price targets on the stock, citing its Q1 performance
  • The biotech firm posted an earnings per share (EPS) of US$2.84 a share, making Q1 2021 its first ever profitable quarter
  • Buy and sell Moderna shares with an IG account

Why did Moderna’s stock price plunge over 16%?

Moderna shares continue to stay compressed this week, as investors remain concerned about the company’s future profitability, with the US government giving its support to the lifting of Covid-19 vaccine patent protections.

The decision comes amidst calls from the World Trade Organization (WTO), led by India and South Africa - two of the hardest hit countries during this pandemic, to allow for generic vaccine production so as to boost supply.

If the patent protection waiver is approved, less wealthy countries will have access to cheaper generic versions of vaccines. This will allow countries like India to inoculate their populations earlier, which has become increasingly pivotal with the number of infections escalating there.

Moderna’s stock price then plunged over 16% to under US$150 a share.

The biotechnology company is hoping to ease the current bearishness with its latest announcement of a new supply agreement with the Australian government for 25 million doses of its mRNA-1273 vaccine through 2022.

What are analysts' latest views on MRNA?

Despite the sell-off, Goldman Sachs raised its target price on the biotechnology stock to US$228 from US$206, while retaining a ‘buy’ rating.

Analyst Salveen Richter said that the company’s latest vaccine supply guidance of up to three billion doses in 2022, came in above his estimates.

He added that promising preliminary data for the manufacturer’s vaccine booster trials also bode well for its earnings.

As such, Richter views the WTO’s proposal to waive intellectual property protections for Covid-19 vaccines as ‘likely non-material’.

Barclays also raised its price target on MRNA to US$194 from US$178 while keeping an ‘overweight’ rating.

On the flipside, Piper Sandler’s Edward Tenthoff lowered his firm’s price estimate to US$231 from US$234, citing concerns over the WHO patent waiver.

However, he does not think the patent waiver would increase global vaccine supply due to the complexity of manufacturing and scarcity of raw materials.

Tenthoff also retained an ‘overweight’ call on the company, citing its Q1 results.

Moderna posts first ever quarterly profit

Moderna reported a revenue of US$1.9 billion for the first three months of 2021, up massively from just US$8 million in the same period a year ago.

Product sales amounted to US$1.7 billion in Q1 2021 thanks to sales of 102 million doses of its Covid-19 vaccine. The spike resulted in the company’s first ever quarterly profit, equating to an EPS of US$2.84 a share.

The company also increased its 2021 base case supply forecast to between 800 million and one billion doses in the same earnings release.

It is also in the midst of forming new partnerships and agreements as well as making additional investments to increase vaccine supply globally in 2022 to up to three million doses.

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