We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
mRNA COVID-19 Vaccine Makers Lose Steam After Strong Rally
Read MoreHide Full Article
Investors of two biotech companies, Moderna (MRNA - Free Report) and BioNTech (BNTX - Free Report) , which came to limelight following robust success of their mRNA-based COVID-19 vaccine are estimated to have lost roughly $60 billion in the last two days. Shares of BioNTech’s partner, Pfizer (PFE - Free Report) also declined yesterday, thus fueling losses. Pfizer, Moderna and BioNTech have gained 25.8%, 268.9% and 340.6%, respectively, so far this year. However, Pfizer declined 3.9% yesterday while shares of BioNTech and Moderna have decreased 19.7% and 20.4%, respectively, in the last two days.
Image Source: Zacks Investment Research
What Resulted in the Downward Movement?
The initiation of an investigation by the European Medicines Agency to study three new conditions found in a small proportion of individuals receiving mRNA-based vaccination is one of the key factors that led to the rout in Moderna and BioNTech stocks. The individuals immunized with a mRNA-based vaccine reported that they developed either erythema multiforme (allergic skin reaction), glomerulonephritis (kidney inflammation) and/or nephrotic syndrome (renal disorder).
Moderna and BioNTech are completely dependent on their mRNA-based COVID-19 vaccines — mRNA-1273 and BNT162b, respectively — for their future growth. Any link between reported conditions and their COVID-19 vaccine may hurt demand for their vaccines. Any setback to anticipated revenues from vaccines will adversely impact stocks of these two companies. Moreover, the COVID-19 vaccine has boosted Pfizer’s top line significantly with the trend expected to continue in the second half of 2021. The vaccine is expected to generate more than 40% of Pfizer’s revenues in 2021. Any setback to mRNA-based vaccines will hurt Pfizer as well.
However, we note that the probable side effects were seen in a small proportion of individuals. These may lead to evaluation of benefit-risk profile of these vaccines and we expect the benefits to outweigh the risks. Moreover, rising support for booster doses from the Centers for Disease Control and Prevention will likely lead to more sales going forward, following a potential approval/authorization.
Moderna’s vaccine seems to be more effective than Pfizer/BioNTech’s BNT162b in a comparison study conducted by Mayo Clinic. With the prevalence of the Delta variant, the effectiveness of both vaccines declined with a more pronounced decrease for BNT162b. Lower effectiveness of Pfizer/BioNTech’s vaccine may also have fueled the decline in their share prices.
Fundamental Factors Not Strong Enough for Moderna
From the end of 2019 till Aug 9, Moderna’s stock price increased almost 24-fold, primarily on the back of anticipated growth fueled by its COVID-19 vaccines. However, a few analysts are now questioning this strong rally in the company’s share price on the back of a single product, that will likely lose steam with a decline in COVID-19 infection rates. The market capitalization of Moderna has reached or crossed levels similar to some large and established pharma/biotech companies, including Amgen (AMGN - Free Report) and Merck (MRK - Free Report) with multiple drugs in their commercial portfolio and promising pipeline candidates.
Per a MarketWatch article, a Bank of America analyst estimates that Moderna needs to deliver 1-1.5 billion doses of COVID-19 vaccine annually for the next 16 years as well as 100% success with its pre-clinical and clinical candidates to justify its current market valuation. Per the analyst, the target for Moderna’s stock is $115 per share, representing more than 70% decline from the price as of Aug 11. However, there are other analysts that still believe in Moderna’s potential and expect the stock to rebound.
Conclusion
With potential rise in cases of infections amid rising fear of the Delta variant, these mRNA-based vaccines along with other available vaccines are likely to have higher demand. Apart from the United States, Canada and some European countries, vaccination rates are low in the majority of countries. Some of them have signed advance purchase agreements for vaccines that will be delivered over the course of the next few quarters. These agreements will likely continue to generate revenues for the vaccine makers, unless there is a sudden decline in infection rates globally. Moreover, potential sales of booster doses will drive revenues further.
However, concerns for Moderna and BioNTech remain due to their sky-high valuations. With no other commercial products in their portfolios, these two companies may see significant volatility going forward as analysts fight over valuations and prospects. Any negative pipeline update may also pull these stocks down.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
mRNA COVID-19 Vaccine Makers Lose Steam After Strong Rally
Investors of two biotech companies, Moderna (MRNA - Free Report) and BioNTech (BNTX - Free Report) , which came to limelight following robust success of their mRNA-based COVID-19 vaccine are estimated to have lost roughly $60 billion in the last two days. Shares of BioNTech’s partner, Pfizer (PFE - Free Report) also declined yesterday, thus fueling losses. Pfizer, Moderna and BioNTech have gained 25.8%, 268.9% and 340.6%, respectively, so far this year. However, Pfizer declined 3.9% yesterday while shares of BioNTech and Moderna have decreased 19.7% and 20.4%, respectively, in the last two days.
Image Source: Zacks Investment Research
What Resulted in the Downward Movement?
The initiation of an investigation by the European Medicines Agency to study three new conditions found in a small proportion of individuals receiving mRNA-based vaccination is one of the key factors that led to the rout in Moderna and BioNTech stocks. The individuals immunized with a mRNA-based vaccine reported that they developed either erythema multiforme (allergic skin reaction), glomerulonephritis (kidney inflammation) and/or nephrotic syndrome (renal disorder).
Moderna and BioNTech are completely dependent on their mRNA-based COVID-19 vaccines — mRNA-1273 and BNT162b, respectively — for their future growth. Any link between reported conditions and their COVID-19 vaccine may hurt demand for their vaccines. Any setback to anticipated revenues from vaccines will adversely impact stocks of these two companies. Moreover, the COVID-19 vaccine has boosted Pfizer’s top line significantly with the trend expected to continue in the second half of 2021. The vaccine is expected to generate more than 40% of Pfizer’s revenues in 2021. Any setback to mRNA-based vaccines will hurt Pfizer as well.
However, we note that the probable side effects were seen in a small proportion of individuals. These may lead to evaluation of benefit-risk profile of these vaccines and we expect the benefits to outweigh the risks. Moreover, rising support for booster doses from the Centers for Disease Control and Prevention will likely lead to more sales going forward, following a potential approval/authorization.
Moderna’s vaccine seems to be more effective than Pfizer/BioNTech’s BNT162b in a comparison study conducted by Mayo Clinic. With the prevalence of the Delta variant, the effectiveness of both vaccines declined with a more pronounced decrease for BNT162b. Lower effectiveness of Pfizer/BioNTech’s vaccine may also have fueled the decline in their share prices.
Fundamental Factors Not Strong Enough for Moderna
From the end of 2019 till Aug 9, Moderna’s stock price increased almost 24-fold, primarily on the back of anticipated growth fueled by its COVID-19 vaccines. However, a few analysts are now questioning this strong rally in the company’s share price on the back of a single product, that will likely lose steam with a decline in COVID-19 infection rates. The market capitalization of Moderna has reached or crossed levels similar to some large and established pharma/biotech companies, including Amgen (AMGN - Free Report) and Merck (MRK - Free Report) with multiple drugs in their commercial portfolio and promising pipeline candidates.
Per a MarketWatch article, a Bank of America analyst estimates that Moderna needs to deliver 1-1.5 billion doses of COVID-19 vaccine annually for the next 16 years as well as 100% success with its pre-clinical and clinical candidates to justify its current market valuation. Per the analyst, the target for Moderna’s stock is $115 per share, representing more than 70% decline from the price as of Aug 11. However, there are other analysts that still believe in Moderna’s potential and expect the stock to rebound.
Conclusion
With potential rise in cases of infections amid rising fear of the Delta variant, these mRNA-based vaccines along with other available vaccines are likely to have higher demand. Apart from the United States, Canada and some European countries, vaccination rates are low in the majority of countries. Some of them have signed advance purchase agreements for vaccines that will be delivered over the course of the next few quarters. These agreements will likely continue to generate revenues for the vaccine makers, unless there is a sudden decline in infection rates globally. Moreover, potential sales of booster doses will drive revenues further.
However, concerns for Moderna and BioNTech remain due to their sky-high valuations. With no other commercial products in their portfolios, these two companies may see significant volatility going forward as analysts fight over valuations and prospects. Any negative pipeline update may also pull these stocks down.