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Moderna Stock: Buy the Dip?

By Taylor Carmichael - Updated Feb 1, 2021 at 2:08PM

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The stock is down 9% after a valuation downgrade from Bank of America.

Moderna (MRNA 1.01%) stock is down 9% on Monday after Bank of America analyst Geoff Meacham downgraded his opinion on the stock from neutral to underperform and kept his $150 target on the shares. Moderna, which traded hands at $185 on Friday, opened at $173 and dropped down to $154 in early trading.

The biotech stock skyrocketed in 2020 because of the COVID-19 pandemic, running up from $19 a share to $111. Moderna's messenger RNA (mRNA) platform allows it to find vaccines quickly and get them into clinical trials before its rivals. Meanwhile, Pfizer signed a collaboration agreement with another biotech, BioNTech, another mRNA specialist, to develop its COVID-19 vaccine. Moderna and Pfizer were neck-and-neck all year in the race to get COVID-19 vaccines to the public. The Food and Drug Administration (FDA) granted emergency use authorization to both companies in December.

Man looking at a stock chart with a Sell arrow pointing down and a Buy  arrow pointing up.

image source: Getty Images

Moderna has a wide-ranging platform with 27 molecules in its pipeline, so long-term investors could be rewarded if it finds success in any major programs including vaccines for cytomegalovirus and certain cancers.

While the market was already bullish about Moderna prior to the pandemic, the huge run-up in valuation is undoubtedly due to its ability to produce (and get clearance) for a highly effective COVID-19 vaccine in under a year. Moderna's phase 3 data and the FDA's resulting decision is seen as a proof-of-concept for Moderna's mRNA platform. Moderna expects to bring in $11 billion in revenue from its vaccine this year.

However, there is a serious downside to Moderna's vaccine and the class of mRNA vaccines in general: distribution issues. Pfizer's drug has to be frozen, and Moderna's vaccine has a 30-day window before it starts to go bad. As a consequence, other vaccine makers like Johnson & Johnson and Novavax might end up taking a larger market share if and when they cross the regulatory finish line, and that could put downward pressure on Moderna's stock.

Investors should probably wait for a cheaper price to buy Moderna.

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Stocks Mentioned

Moderna, Inc. Stock Quote
Moderna, Inc.
MRNA
$137.62 (1.01%) $1.37
Bank of America Corporation Stock Quote
Bank of America Corporation
BAC
$35.87 (5.94%) $2.01
Johnson & Johnson Stock Quote
Johnson & Johnson
JNJ
$179.44 (1.39%) $2.46
Pfizer Inc. Stock Quote
Pfizer Inc.
PFE
$52.88 (0.78%) $0.41
Novavax, Inc. Stock Quote
Novavax, Inc.
NVAX
$51.40 (-3.78%) $-2.02
BioNTech SE Stock Quote
BioNTech SE
BNTX
$163.22 (0.14%) $0.22

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