What happened
Actions of Modern (NASDAQ: MRNA) It soared higher on Monday, following bullish comments from analysts and news that the biotech company would be added to a popular stock market index.
As of 2:05 pm EDT, Moderna’s shares increased more than 20%.
And that
Moderna’s experimental COVID-19 vaccine could produce annual sales of more than $ 5 billion, if it is safe and effective. This is stated by Jefferies analyst Michael Yee, who started hedging Moderna shares with a buy rating and a target price of $ 90.
Although he cautioned that Moderna’s vaccine candidate may not work and acknowledged that analysts are “hugely divided on valuation,” Yee believes the potential investor rewards are worth it.
“We believe [Wall] Street will be surprised to the upside if the COVID-19 vaccine works, is approved in early 2021, and there are multi-million dollar purchase orders from the US and around the world, “Yee said.
Moderna’s shares soared on Monday. Image source: Getty Images.
Moderna’s stock price gains were also driven by news that its shares would be added to Nasdaq-100 Index. It will join the popular technology-focused index before the market opens on July 20.
Now what
Although being added to a stock index has no impact on the fundamental value of a business, the funds that track the Nasdaq-100 will soon need to buy shares of Moderna. Traders know this, and tend to try to overtake the often large purchases of these funds, which helps explain some of the purchases that helped lift stocks on Monday.
More interesting is Yee’s claim that Moderna will receive “at least” an emergency use authorization for its candidate vaccine in early 2021. “We believe the company’s COVID-19 mRNA-1273 vaccine will work and that large orders will come. Yee said. “We believe that billions in sales would be reasonable and that there would be high demand in the first one or two years.”
Moderna’s phase 1 results were promising, and the company currently has a phase 2 study underway. She hopes to start a phase 3 trial in the coming weeks.
However, Moderna faces formidable competition from people like Pfizer, Johnson and Johnson, AstraZeneca, and more than 100 other companies and universities. Moderna will not only need to demonstrate that its vaccine is safe and effective, but also better than that of its competitors. Although it is certainly possible, doing so will not be easy.
Still, judging from recent equity gains, investors seem to like Moderna’s chances for success.
