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Shares of
Moderna
are up 239% so far this year, and the biotech company, which has no approved drugs, has a market capitalization of more than $24 billion.
But in a note out Monday morning, Jefferies analyst Michael Yee writes that the stock can still climb higher.
The biggest story for Moderna (ticker: MRNA) is the company’s Covid-19 vaccine, which turned what was once a controversial if promising biotech into a household name. The company is on the brink of beginning Phase 3 trials of the vaccine. Yee thinks that it could soon be a blockbuster for the company.
“We believe the company’s Covid-19 vaccine mRNA-1273 will work and big orders will come in,” he wrote.
Yee believes that the Food and Drug Administration could issue the vaccine an emergency use authorization by early next year.
The analyst initiated coverage of Moderna shares with a Buy rating and set a price target of $90. The stock was trading at $66.37 on Monday morning, up 6%.
Of the 14 analysts tracked by FactSet with ratings on Moderna, 13 rate it a Buy while one rates it a Hold.
“We think billions in sales would be reasonable and there would be high demand over the first one to two years,” Ye wrote. He estimates $2 billion in sales of the vaccine in the first year it is on the market, but said that the number could notionally be far higher.
Yee wrote that if Moderna’s Covid-19 vaccine succeeds, it would validate the company’s large pipeline of messenger RNA-based drugs, which rely on the same relatively unproven technology as the Covid-19 vaccine.
“This is the key: If it works, it’s not just huge dollars coming in, but platform validation with lots of pipeline behind it,” Yee wrote. “This is analogous to any biotech that proves a platform works and can be applied across the board.”
Last week, shares of Moderna fell on reports that disagreements with government scientists were delaying the start of the Phase 3 trial of its Covid-19 vaccine. At the time, Barron’s noted that the reported disagreements highlighted a potential risk for biotech companies with no marketed products in the late stages of the vaccine race: They may prove out of their depth in the scramble for regulatory approval. Moderna said at the time that many of its employees had decades of experience in the industry and had run Phase 3 programs at “top five vaccine companies.”
Yee acknowledged that if the vaccine doesn’t work, the stock could get “hit hard.” But he wrote that he “believes the stock could appreciate 25% to 50% over the next six to 12 months.”
Next steps for Moderna include publication of the full data from the Phase 1 study of the Covid-19 vaccine, expected this month, and the start of the large Phase 3 study, also expected this month.
Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com