An analyst for Bank of America (BofA) has dubbed Moderna's current stock price
as "ridiculous." BofA Securities Analyst Geoff Meacham said the Massachusetts-based biotechnology firm's valuation is "unjustifiable on a fundamental basis." Meacham's Aug. 10 analysis ultimately suggested that Moderna's stock should be 75 percent lower than its current price.
Meacham wrote that Moderna's valuation
went "from unreasonable to ridiculous." He pointed out that with the 11-year-old company's $195.56 billion value, it was worth more than other firms that have existed for a longer period. Meacham said Moderna exceeded the 40-year-old Amgen Inc. valued at $129.3 billion and the century-old Merck & Co. Inc. valued at $189.7 billion.
Moderna's stock prices shot up to about $484.87 after its two-dose mRNA vaccine received provisional authorization in Australia. But Meacham said the company's stock price should only cost $115, which is 75.2 percent below current prices. Incidentally, Moderna's stock dropped 4.2 percent during afternoon trading on Aug. 10, which lowered its value to $187.3 billion and put it behind Merck.
According to a Fierce Pharma article
, analysts from Jefferies Group compared Moderna to technology or electric vehicle companies. In an Aug. 10 note, they called the Massachusetts company the "Tesla of biotech." However, they set a higher share price of $425 for Moderna – almost four times as Meacham's suggested stock price.
While the Jefferies analysts expressed a bullish outcome for Moderna, Meacham said the company needs to justify its almost $200 billion value through two things. First, it has to deliver 1 billion to 1.5 billion COVID-19 vaccine doses every year through 2038. Second, its other products – which include mRNA vaccines for cancer, influenza and rare diseases – need to be 100 percent successful.
Moderna has a total of 22 biotechnology products still undergoing testing, which amounts to $30 billion in total peak sales. Four of these are in phase two trials, while 10 are in phase one testing. Eight other programs have not yet undergone human trials. (Related: Pfizer, Moderna raise prices of their mRNA coronavirus vaccines to extract yet more profits from the pandemic
Booster shots set to boost Moderna's profits
Even as BofA Securities' Meacham questions the valuation of Moderna's stock, others believe that the company is set to make even more should the need for booster shots come.
Jefferies analysts expect the Centers for Disease Control and Prevention
to soon recommend booster shots. They believe that the Food and Drug Administration
will "likely" amend the Moderna vaccine's emergency use authorization to include immunocompromised people and the elderly by Labor Day.
Modern has already been paid billions of dollars to supply its vaccines for the two doses currently given. Boosters would only increase its revenue further.
But the question now is just how much more of its vaccine will the company be able to sell, should booster shots become a reality.
Bank of America analysts say that, even with the boosters, long-term demand for Moderna's vaccines could be subdued. They point to the fact that boosters may only be relegated to the immunocompromised. This means that they won't add as much to the company's bottom line compared to if boosters were recommended for everyone who's been vaccinated with their vaccine.
That said, boosters will still add to Moderna's profits, which is why the people behind the company are pushing for them.
Dr. Derrick Rossi, Moderna co-founder and stem cell biologist, concurred with the need
for booster shots. He told Canadian news channel CTV News
: "I think boosters are most likely going to be in the cards, and evidence is pointing towards that. [The] evidence emerging out of Israel [proves] that a booster is almost certainly the way."
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