What happened?

Shares of Moderna (NASDAQ:MRNA) declined sharply on Thursday and ended the trading session down by 9.6%, despite the company not reporting any news. The catalyst for the biotech's losses on the market today may have been negative comments from an analyst. 

So what

In a note issued Wednesday evening, SVB Leerink analyst Mani Foroohar initiated coverage on Moderna's stock with a market perform (or "hold") rating. The analyst also gave the stock a $65 price target. Note that even after today's decline, Moderna's shares are worth $75.33 apiece. Foroohar believes that Moderna's experimental vaccine for COVID-19, mRNA-1273, has good chances of earning regulatory approval.

Further, the analyst sees Moderna attracting a lot of patients with its vaccine in the early days after it is launched. Despite these potential upsides, Foroohar thinks Moderna's stock is currently overvalued and sees its current levels as an "unattractive risk/reward to investors following torrid performance year-to-date."

Road sign that says "risk ahead."

Image source: Getty Images.

Now what

Foroohar may be onto something; Moderna's shares have soared by a little more than 280% this year, mainly due to its efforts to develop a vaccine for COVID-19. Sure, the company seems increasingly likely to launch its vaccine on the market, especially given that it plans on starting a phase 3 clinical trial for mRNA-1273 on Jul. 27. Still, several competitors -- including Pfizer and AstraZeneca -- are also making significant headway in their efforts.

What's more, given the dire worldwide need for a COVID-19 vaccine, several companies could end up getting their candidates approved by regulatory authorities. Moderna may have to share this market with its peers, and in the long run, the financial benefits it will reap from this opportunity may not live up to investors' expectations. For all these reasons, this biotech stock seems a bit too risky.