Why some analysts are wary about Moderna's Covid-19 vaccine data

Although Moderna’s share price has soared over 200% this year, some analysts believe the company has to deliver more substantial positive Covid-19 vaccine data in order to justify its ‘lofty’ valuation.

What’s the Moderna share price update?

Shares of Moderna Inc hit a two-month peak on Wednesday 15 July 2020, following the release of more detailed Covid-19 vaccine trial data that some experts have deemed as ‘promising’.

The US pharmaceutical company’s stocks hit US$84.75 per share on Wednesday morning – its highest price since 19 May 2020, based on IG data. The stock was the second most traded share of the day on the IG platform.

Moderna eventually closed the session just slightly under at US$80.30 a share.

IG market analysis show that ‘sells’ form 51% of all trades on the Moderna counter this week. On a monthly basis, ‘buys’ form 50% of all trades so far this month.

Additionally, 100% of IG client accounts with open positions in this market expect Moderna’s share price to rise.

Why did the Moderna stock hit a two-month high?

Moderna's share price rally began on Tuesday 14 July, when the biotechnology company announced interim Phase 1 study results of mRNA-1273, its vaccine candidate against Covid-19.

This latest evaluation report had reaffirmed an earlier set of ‘positive’ interim data first revealed on 18 May 2020. The results showed that mRNA-1273 ‘induced rapid and strong immune responses against’ the coronavirus.

Moderna added in the update that its Covid-19 vaccine candidate ‘was generally safe and well-tolerated, with no serious adverse events reported through Day 57’.

Moderna is one of many US drug manufacturers that are currently in the race to finding a Covid-19 vaccine. Other companies with vaccine candidates include Pfizer, Gilead Sciences, Johnson & Johnson, Novavax and Inovio Pharmaceuticals.

Elsewhere, China’s Sinovac Biotech, UK’s GlaxoSmithKline and British-Swedish company AstraZeneca have also begun vaccine trials of their own.

Are you looking to buy long Moderna Inc shares without having to trade the actual asset? IG’s CFD feature allows you to do just that.

The bull case for Moderna shares

Since the publication of the initial findings, some analysts have reiterated their ratings on the Moderna stock, even increasing their share price targets.

Piper Jaffray’s Edward Tenthoff raised his price estimate to US$134 from US$100, stating that the data ‘demonstrate clean safety and robust immunogenicity of the 100µg mRNA-1273 dose’.

In addition, he noted that ‘there were no neutropenia or lymphopenia’ in the participants as was present in BioNTech and Pfizer’s mRNA vaccine BNT162b1.

Meanwhile, Jefferies researcher Michael Yee, who called a ‘buy’ on Moderna alongside a US$90 price target, wrote: ‘Early vaccine data continues to look very promising, and has a very reasonable likelihood of working and protecting against infection.’

The more conservative view

On the other hand, Bloomberg Intelligence pharmaceutical analysts Cinney Zhang and Sam Fazeli wrote on 15 July that Moderna's Phase 1 data appeared ‘inconclusive for Covid-19 prevention’.

They added that questions over mRNA-1273’s prevention effectiveness ‘may only be answered by its Phase III trial’ due to start on 27 July. They also noted that side effects were a ‘mild concern’ in this round of testing, while ‘T-cell response to-date don’t look encouraging’.

In terms of share price, although Moderna’s stock value has skyrocketed over 200% this year, this has been predicated on the assumed success of mRNA-1273, as well as other pipeline therapies. However, ‘all of these…have yet to gain validation’, the analysts cautioned.

‘To add weight to its lofty valuation, Moderna must deliver substantial positive pipeline data’, they concluded.

How to trade US stocks with IG

Are you feeling bullish or bearish on Moderna Inc's share price? Either way you can buy (long) or sell (short) the asset using derivatives like CFDs offered on IG's industry-leading trading platform in a few easy steps:

  • Create a live or demo IG Trading Account, or log in to your existing account
  • Enter <Moderna Inc> in the search bar and select the instrument
  • Choose your position size
  • Click on ‘buy’ or ‘sell’ in the deal ticket
  • Confirm the trade

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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