Moderna Party Ending, Analysts Caution Before Shot Approval

(Bloomberg) -- Moderna Inc’s swift rise -- much of it driven by daytraders speculating over the chances of its Covid-19 vaccine getting approval -- is picking up more detractors on Wall Street by the day.

Morgan Stanley is the latest to downgrade the stock after its 653% rally this year through Tuesday’s trading. The bank expects the shares will be driven by “vaccine revenue realization, vaccine competition and long-term Covid-19 revenue sustainability” over the next year or so.

The stock fell as much as 8.8% to $134.31 per share at the open on Wednesday. Moderna’s shot will face a Food and Drug Administration panel on Thursday, and soon after the vaccine is likely to get regulatory clearance.

Now is the time to step to the sidelines as investor expectations are “closer to the bull case than the bear case on Covid-19,” Morgan Stanley analysts led by Matthew Harrison wrote to clients, cutting their rating to equal-weight from overweight.

The bank’s 12-month price target was raised to $150 from $100, which is below the biotech’s record closing price of $169.86 reached earlier this month.

Moderna’s valuation may be at risk if retail interest wanes as new vaccines become a reality. Pfizer Inc., the other frontrunner in the search for a shot, has sold off roughly 11% in the past six trading days. Pfizer and its German partner BioNTech SE’s inoculation received an emergency use authorization at the end of last week.

Morgan Stanley’s downgrade follows a similar warning from Jefferies analyst Michael Yee, who cut his rating to hold from buy overnight citing the “significant stock run and elevated expectations.” An analyst at Needham also cut his stock rating last Wednesday. Moderna now has nine buys, seven holds and two sell ratings, according to data compiled by Bloomberg.

The average analyst price target of $136 indicates there may be a little more downside to come before specialist investors can safely get back into the stock. As one of the top biotech outperformers for the year, Moderna is also a prime target for bears. Close to $4 billion in shares are shorted, according to financial analytics firm S3 Partners.

©2020 Bloomberg L.P.