- Moderna‘s epic year-to-date rally of 553% is “unjustifiable on a fundamental basis,” Bank of America said in note on Tuesday.
- Moderna traded at a near-$200 billion valuation on Monday, making it worth more than fellow vaccine player Merck.
- Bank of America reiterated its $115 price target, representing downside potential of 76%.
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Moderna‘s epic year-to-date rally of more than 550% could come crashing down as its market valuation of almost $200 billion is “unjustifiable on a fundamental basis,” Bank of America said in a note on Tuesday.
The bank reiterated its target price of $115, representing potential downside of 76% from Monday’s close. A lot will have to go right for Moderna to justify its worth being more than 100+ year-old pharmaceutical giants like Merck and Bristol-Myers, according to the note.
“To justify $200 billion in value, one has to assume: i) 1 to 1.5 billion doses of COVID-19 vaccine each year from 2022-2038; and ii) 100% probability of success for the entire pipeline with aggregate peak sales of $30 billion,” (BofA) explained.
While the bank remains positive on the mRNA technology Moderna uses to develop its therapies, it believes the above assumptions are “impossible to justify.”
Moderna has soared higher as investors increasingly think demand for its COVID-19 vaccines will remain strong for years to come. And that demand is already flowing through to its income statement, with Moderna reporting second-quarter revenue growth of 6,516% to more than $7 billion..
But (BofA)‘s discussions with infectious disease experts suggests skepticism is warranted regarding the long-term demand for COVID-19 vaccines. The bank highlighted these 5 reasons long-term demand for COVID-19 vaccines may be muted:
1. Breakthrough infections are rare, but when they happen, the vast majority are mild/moderate.
2. Current COVID-19 vaccines still provide robust protection against infection but also severe outcome, the main metric driving lockdowns.
3. Normal exposure to new variants is likely to enhance immune protection.
4. Regular boosters are not broadly justified except in limited immune-compromised populations.
5. Increasing evidence that new variants are not more pathogenic.
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