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What’s next for Moderna after S&P inclusion?

A majority of institutional investors believe Covid-19 vaccine maker Moderna's shares will decline by at least 20% by the end of 2021.

  • Moderna Inc (Nasdaq: MRNA) share price rallied above US$350 this week
  • The Covid-19 vaccine maker joined the S&P 500 last week to much fanfare
  • Still, analysts expect the stock to dip to US$197.85 in the coming year
  • Feeling bullish or bearish on Moderna shares? Open an account to get started.

Moderna stock price boosted by 50%

Shares of US-based vaccine maker Moderna, which competes with AstraZeneca, Pfizer and Johnson & Johnson, declined by 1.1% day-on-day to close at US$345.64 on Thursday (29 July 2021).

However, the counter is still up 47.1% over the past month, fuelled by news that Moderna had joined the S&P 500 last Wednesday (21 July) as the index’s top performer this year.

The S&P 500 is widely followed as a benchmark gauge of large-cap US equities. New joiners typically see their shares rally in the lead-up to the index inclusion, as investors adjust their portfolios, Bloomberg said.

As of 30 July, research teams were largely optimistic on the MRNA stock, with eight out of 17 analysts recommending ‘buy’, five suggesting ‘hold’, and four with ‘sell’ calls. Their average 12-month target price for the drugmaker was US$197.85, according to Bloomberg data.

Last week, JPMorgan gave a ‘neutral’ rating with a US$131 target, while Goldman Sachs said ‘buy’ and targeted US$299.

Jefferies strategist Will Sevush recently wrote that bulls on Moderna’s stock are ‘very few and very far between’.

What helped Moderna’s stock value to triple?

Moderna, which has grown from an early-stage biotech firm to a worldwide supplier of Covid-19 jabs, has seen its share price more than triple so far this year.

With a year-to-date gain of 209.4%, its share performance tops the S&P 500 index’s existing leader, L Brands Inc, which has risen about 104%, Bloomberg reported.

The counter reached fresh highs in the run-up to its index inclusion. Moderna’s market capitalisation surged to US$138.8 billion as of Thursday.

The company’s innovations in making messenger ribonucleic acid (mRNA) vaccines have also prompted some analysts to call Moderna the ‘Tesla of biotech’.

What’s the outlook on Moderna?

Moderna has projected sales of its Covid-19 shots could hit US$19.2 billion this year, while Wall Street consensus stands at US$18.1 billion.

For its Q2 2021 results, to be released on 05 August 2021, investors will likely shift their focus to the sustainability of its Covid-19 vaccine income and the potential impact on 2022 and 2023, said Bloomberg Intelligence analysts.

Goldman Sachs’ research team expects Moderna may be able to bring a new flu shot to the market by 2023, followed by a combination of a flu and Covid-19 vaccine in 2024 or later.

In addition, the company is working on new vaccines and medicines for cancer and HIV as well as Zika and heart disease.

Nearly three-quarters of hedge funds and institutional investors - out of the 191 surveyed by Jefferies - believe that Moderna’s shares will be little changed or decline by at least 20% by the end of this year.

What’s your take on Moderna shares? Take a position on the stock today.

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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. See full non-independent research disclaimer and quarterly summary.

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