What happened

Shares of Moderna (MRNA -0.09%) fell sharply on Monday, following an analyst downgrade and positive vaccine trial results from a rival drugmaker. By the close of trading, its stock price was down 12.8% after falling as much 17.7% earlier in the day.

So what

JPMorgan cut its rating on Moderna's stock from "overweight" to "neutral," citing concerns that its valuation has become stretched after its torrid run so far in 2020. Prior to today, Moderna's shares were up a staggering 385% year to date and 576% over the past year. 

A person is pointing to a digital stock chart that rises sharply then falls.

Moderna's stock gave up a portion of its recent gains on Monday. Image source: Getty Images.

The firm's analysts also highlighted the continued uncertainty surrounding Moderna's COVID-19 vaccine candidate, mRNA-1273, and intensifying competition among drugmakers.

"This stock move itself isn't entirely surprising given the rapid execution on mRNA-1273, the tremendous widespread investor interest on this program, and the obvious unmet need/opportunity for a COVID-19 vaccine," JPMorgan analyst Cory Kasimov and his team wrote in a report to investors. "That said, at these levels, we are having difficulty justifying more upside given the uncertainty of the duration/characteristics of the COVID-19 pandemic."

Now what 

It should be noted that JPMorgan did raise its 12-month target price for Moderna's stock from $60 to $89. The investment bank's new price forecast represents potential gains for investors of nearly 8%, based on Moderna's closing price of $82.68.

JPMorgan also noted that it continues to think highly of Moderna's drug-development platform. Kasimov clarified the firm's position:

To be clear, this is not a call on any sort of diminished expectations around the company or mRNA-1273; we remain bullish on Moderna's long-term outlook, disruptive platform (in the vaccine space and otherwise), and chances of being one of the first companies to bring a COVID-19 vaccine to market.

Still, Moderna faces formidable competition in the coronavirus vaccine race. As an example, an experimental COVID-9 vaccine developed by Oxford University and AstraZeneca generated "robust immune responses" in all of the participants in its early stage trials. The news was announced on Monday morning and no doubt contributed to Moderna's stock price decline.