The biotech sector has been hit hard in recent years. Among the most disappointing stocks for growth investors in this space has certainly been Moderna (NASDAQ:MRNA), an RNA-based vaccine maker that surged during the pandemic but has tailed off recently due to diminishing demand for its core product. That said, today’s impressive 15% surge in MRNA stock appears to have some investors reinvigorated in this name, for good reason.
Today’s move appears to be tied to a key analyst upgrade from Oppenheimer. The brokerage firm upgraded Moderna to an “outperform” from “perform,” citing an improved outlook for the company’s core Covid-19 vaccines next year and Moderna’s pipeline developments as reasons for the upgrade.
Let’s dive into what was announced in this upgrade and why investors are growing increasingly bullish on Moderna today.
Why Is MRNA Stock Surging Today?
Certain analyst upgrades can impact a given stock more than others. In many cases, it’s not necessarily the rating or price targets provided that move the needle but the commentary analysts provide. That certainly seems to be the case here, with the market clearly rethinking Moderna’s outlook in 2024, 2025 and beyond.
Analyst Hartaj Singh from Oppenheimer noted that Moderna has made significant improvements in terms of its cost structure. This positions the company well to profit from its future pipeline. Singh believes Moderna could be a “five-product commercial player by 2026,” a timeline that’s certainly a lot more bullish than what many investors appear to have priced in.
Moderna CEO Stéphane Bancel also released the company’s annual shareholder letter, which outlines the company’s plans for sales growth to reignite by 2025. This announcement clearly appears to have investors redoing their models. Bancel also noted that the company’s flu/Covid combination vaccine should be available by 2025, and an RSV vaccine candidate could be approved this year.
These two catalysts could be big for the stock, and investors aren’t wasting time pricing in the potential impacts of these developments. Indeed, the market is forward-looking, so today’s move certainly makes sense. However, Moderna remains an execution story, at least in my view. If things don’t work out how the company’s management team expects, this is a stock that could easily give up its recent gains. Thus, it’s one I remain on the fence on for now.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
