Shares of BioNTech (BNTX 1.48%) were sinking 10.4% as of 3:18 p.m. EST on Tuesday. The decline came after Bank of America analyst Tazeen Ahmad downgraded the stock to a neutral rating from a buy.
It's best not to place too much emphasis on Wall Street analysts' upgrades and downgrades, although understanding the reasoning behind their views can be helpful.
In this case, Ahmad thinks that BioNTech will face increased competition for BNT162b2, the COVID-19 vaccine the German biotech developed with its big American partner, Pfizer (PFE 0.52%). BNT162b2 hasn't yet been approved or granted Emergency Use Authorization (EUA), but that could soon change.
Ahmad is right that BioNTech and Pfizer will likely compete against several other players. Moderna, for example, could win EUA for its COVID vaccine mRNA-1273 soon after BNT162b2 does. AstraZeneca and Johnson & Johnson might not be too far behind with their respective vaccine candidates. Both big drugmakers intend to make their coronavirus vaccines available at cost during the pandemic, which could give them an advantage over BioNTech and Pfizer.
On the other hand, the success of BNT162b2 will give BioNTech an influx of cash to invest in advancing its other pipeline candidates. In addition, the validation of the company's messenger RNA (mRNA) approach could bode well for its other mRNA programs.
What really matters right now for the biotech stock isn't an analyst's opinion. Instead, the most important thing is the pending regulatory decisions for BNT162b2. A Food and Drug Administration advisory committee is scheduled to review the EUA filing for the COVID-19 vaccine on Dec. 10. The FDA should make its decision soon afterward.