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Moderna’s share price gets a good prognosis

As the race towards a coronavirus vaccine continues, so do the rallies behind biotech stocks like Moderna [MRNA]. Recent positive news regarding its vaccine trial has seen Moderna’s share price edging up, but what does this mean for the stock in the long run?

Moderna’s share price is not alone in being backed by great investor enthusiasm in recent months. Biotech companies across the board have been seeing growth, to varying degrees.

Following a tumble in March, Moderna’s share price reached an intraday high of $95.21 before closing at $94.85 on its best day of trading so far, 17 July. This marked an increase of 384.9% year-to-date and its highest ever close. 

Although Moderna’s share price has slowed down since, falling to $54.34 on 8 September, the lowest close since its record-high in July, the stock has made something of a recovery in the last few weeks. On 13 October Moderna’s share price closed at $78.29 — a 44% increase from its recent low.

 

More than just a COVID-19 vaccine? 

Moderna’s recently announced positive results regarding its vaccine candidate — mRNA-1273 — saying it was well-tolerated and generated a strong immune response in older adults. 

“The findings are reassuring because immunity tends to weaken with age”, Dr. Evan Anderson, one of the study’s lead researchers from Emory University in Atlanta, said in a phone interview with Reuters.

However, this had very little immediate effect on Moderna’s share price, which remained flat on 29 September.

Furthermore, Swiss contract manufacturer Lonza [LONN] said it’s confident that it would be able to produce commercial quantites — expected to total around 300 million — of mRNA-1273 in the event that Moderna is able to produce a safe and effective vaccine, according to Seeking Alpha. 

However, a COVID-19 vaccine could just be the beginning. “While mRNA-1273 deserves all of the attention that it's getting, there's a bigger story about Moderna that many investors could be missing: the biotech's pipeline,” Keith Speights wrote in The Motley Fool.

Speights noted that Moderna believe that, if its approach to using mRNA works, then it can be applied to other vaccines to deal with other products in its pipeline. 

“Moderna's pipeline currently includes six other mRNA vaccines. The mRNA strategy isn't limited to just viral diseases, though: Moderna also has seven other clinical-stage candidates using mRNA to target indications including cancer and coronary artery disease,” Speights wrote.

 

A healthy prognosis for Moderna’s share price

“The coronavirus vaccine could merely be the tip of the iceberg for Moderna — thanks to the company's deep pipeline and its potential to target even more diseases. Don't be surprised if, in the not-too-distant future, Moderna's current market cap of $28bn looks dirt cheap in retrospect,” Speights concluded.  

Alan Carr, an analyst at Needham, has a bullish outlook for Moderna’s stock. He reiterated a Buy rating on 18 September with a $94 price target after a company research and development event highlighted “encouraging” intitial data. 

“The Moderna vaccine has less demanding storage requirements than the Pfizer mRNA vaccine (-20C vs -80C),” Carr said. 

“Progress with mRNA-1273 as a vaccine for COVID-19 represents an opportunity for upside in 4Q20. We believe the stock is attractive in the long-term, given validation of the Moderna mRNA platform and an extensive diversified pipeline.”

Moderna’s share price has a consensus Hold rating from Zacks Equity Research. Among 25 analysts polled by CNN, the consensus is to buy the stock, a rating held by 12 analysts, while two rate it a Hold and one a Sell. 

The median 12-month price target among 14 analysts polled by CNN is $91.50, with a high estimate of $136 and low of $41. The median price represents a 16.9% increase compared with Moderna’s share price as of 13 October’s close

Disclaimer Past performance is not a reliable indicator of future results.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.

*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.

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