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Moderna’s Capabilities Beyond Covid-19 Vaccines are Underappreciated

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UBS analyst Eliana Merle has upgraded shares of biotech company Moderna to Buy from Neutral, attributing the move to investors’ lack of appreciation for the company’s capabilities beyond Covid-19 vaccines. However, Merle also lowered Moderna’s stock price target to $191 from $221.

In a research report, Merle stated that “we think near-term investor focus remains on Covid revenues, however we see Moderna‚Äôs broader non-Covid pipeline as underappreciated and we think we are approaching a turning point where this could come into greater focus.” This is due to potential upcoming RSV vaccine launches, updates across latent vaccine pipeline (i.e. cytomegalovirus phase 3) and further oncology updates (individualized neoantigen therapy).

Although Moderna’s stock has decreased by 33% this year, it has risen by 2.6% in Monday trading to $121.51.

Merle stated that the Covid and RSV businesses alone make up $123 per share. “If we remove Covid completely (no change to pipeline or operating expenditures) our valuation would be about $76 per share share (about $28 billion [market cap]).”

Implications

Moderna’s stock declined this year with investors focusing on the sales revenue from their Covid-19 vaccine. However, UBS has upgraded their shares as they believe that Moderna’s non-Covid pipelines have potential for future growth. Investors may want to consider Moderna’s full range of products, which have historically shown promise, in their decision-making process.

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