The COVID-19 pandemic has created unprecedented uncertainty in financial markets, and market movements on Monday morning showed the impact it is having on market participants. Investors continue to see huge disparities in how different stocks move, with growth-oriented companies in their favor, while the cyclical giants of the old economy have lagged behind. Just before 11 am EDT, the Dow Jones Industrial Average (DJINDICES: ^ DJI) It dropped 65 points to 26,607. However the S&P 500 (SNPINDEX: ^ SPX) increased 9 points to 3,233, and the Nasdaq compound (NASDAQINDEX: ^ COMP) It rose 115 points to 10,618.
Trying to find a viable coronavirus vaccine has become a top priority among pharmaceutical and biotech companies. That has created a competitive environment in which the success of a company can have side effects across the industry. Today, AstraZeneca (NYSE: AZN) released its latest test data on its candidate vaccine. However, where investors felt that the worst part of that news was in shares of Modern (NASDAQ: MRNA), which fell partly due to competition and partly due to negative opinions from stock analysts.
Will you win the AstraZeneca vaccine?
AstraZeneca shares fell approximately 2% late Monday morning. The stock was up as much as 6% earlier in the session, but no one yet knows whether several companies will be able to develop vaccines to fight COVID-19.
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AstraZeneca has been working together with researchers from the University of Oxford in the UK on an experimental coronavirus vaccine. Since April, researchers have been doing early-stage studies to determine the candidate’s immune response to the vaccine, as well as to build a safety profile.
The results so far are encouraging. The treatment creates neutralizing antibodies to help fight the coronavirus, and also makes the body’s own T cells work more efficiently to try to contain the disease. Despite some minor side effects, researchers are conducting larger trials both in the UK and in other countries like Brazil. They anticipate an American study in the near future.
For AstraZeneca, the stakes are high. Oxford hopes to use the drug maker’s production capacity to make 2 billion doses of the vaccine, and countries around the world have already signed up to receive deliveries when they become available.
Modern is too expensive?
Elsewhere in the healthcare sector, Moderna’s shares fell 11% on Monday morning. AstraZeneca’s competition provides a piece of the puzzle that explains the decline, but Wall Street analysts also deserve some of the blame.
JP Morgan analysts downgraded Moderna’s shares from overweight to neutral. To be clear, analysts have not changed their views on the biotech company’s chances of being the first to develop a viable COVID-19 vaccine. With its mRNA-based technology, Moderna has been able to rapidly advance with clinical trials to try to get ahead of other companies.
However, what JP Morgan finds troubling is the rapid rise in Moderna’s stock price. Before today’s decline, stocks were up more than 50% since early July and up 400% from February levels.
Interestingly, JP Morgan kept its target stock price unchanged. At $ 89 a share, that’s more than Moderna now operates. If Moderna can go on to develop a successful vaccine, then there is still room for biotech stocks to claim additional gains, even if those gains may not be as big as they will be for those who bought stocks just a few months ago. .
