Can Moderna return to February 2021 highs?

Can the biotechnology stock, which is down 30% since February’s highs, rediscover its winning ways?

  • Moderna Inc (NASDQ: MRNA) share price is down nearly 10% since Tuesday (16 March 2021), as US bond yields increased to one-year highs
  • This week, the biotech company launched a new trial of its Covid-19 vaccine for children ages six months to 11 years old
  • The company also announced a phase one study of its next generation Covid-19 vaccine, mRNA-1283
  • Piper Sandler analysts raised their price target on the stock earlier this week
  • Trade Moderna's stocks with an IG account

Moderna launches vaccine trial for children

Moderna Inc announced earlier this week that the first participants aged between six months and 11 years old have been dosed in the Phase 2/3 study of mRNA-1273, its Covid-19 vaccine candidate.

The trial will aim to evaluate the safety, tolerability, reactogenicity and effectiveness of two doses of mRNA-1273 given 28 days apart.

The study will consist of two parts. In the first part, participants ages two years to less than 12 years may receive one of two dose levels, while those ages six months to less than two years may receive one of three dose levels. An interim analysis will then be conducted to determine which dose will be used in part two, the placebo-controlled expansion portion of the study.

Moderna says it intends to enrol approximately 6,750 pediatric participants in the US and Canada.

As of 16 March 2021, 53 million doses of mRNA-1273 have been administered to adults aged over 18 years old in the US, according to Stéphane Bancel, Chief Executive Officer of Moderna.

Moderna stock down over 10% this week

The drug manufacturer also announced that the first participants have been dosed in the phase one study of mRNA-1283, its next generation Covid-19 vaccine candidate.

This study will aim to assess the safety and immunogenicity of mRNA-1283, which is intended to be refrigerator-stable.

Despite these announcements, Moderna’s share price has declined nearly 10% since Tuesday (16 March), as the stock found itself unable to fight off the latest increase in US bond yields.

On Thursday (18 March), US 10-year Treasury Yields soared eight basis points to 1.71% - the highest level in over a year. Meanwhile, the 30-year Treasury bond saw yield jump three basis points to 2.472% - the highest level since August 2019.

Analysts see the yield hikes as a ‘belated overreaction’ to the Federal Reserve’s upbeat economic growth projections and guidance for higher inflation.

That’s because when the expected future rates of inflation rise, bond yields will also rise accordingly, as investors demand for higher yields to compensate for the risks that inflation poses with purchasing power of the bonds eroded.

Where do analysts see the stock next?

In terms of outlook, analysts have given Moderna a consensus 12-month share price target of US$149.65 and rating of ‘hold’, based on the latest MarketBeat data.

The price target represents a 5.8% upside from the stock’s last traded price.

The latest price estimate came from Piper Sandler analyst Edward Tenthoff. on 15 March. They reiterated an ‘overweight’ rating and price target of US$208 a share.

Their bullish forecast is based on the fact that Moderna is ‘effectively transitioning’ into a lucrative, global commercial entity.

The analyst also noted that the US government’s demand for mRNA-1273 remains high, with Moderna having signed a further US$18.4 billion worth of advanced purchase agreements.

On the other hand, Morgan Stanley lowered its price target on the stock to US$201 from US$215 previously on 04 March, while keeping rating at ‘equal weight’.

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