What happened

Shares of Moderna (NASDAQ: MRNA) plunged 15.6% on Wednesday after Europe's drug regulator provided a COVID-19 vaccine-safety update. 

So what

The European Medicines Agency (EMA) is studying three new conditions reported by a small number of people who received mRNA COVID-19 vaccines provided by Moderna and Pfizer

These conditions include:

  • Erythema multiforme, an allergic skin reaction.
  • Glomerulonephritis, or kidney inflammation.
  • Nephrotic syndrome, a renal disorder.

The EMA is assessing whether these conditions could be possible side effects of the vaccines.

A healthcare professional is administering a vaccine to a person.

Image source: Getty Images.

The information was provided as part of ongoing safety updates the EMA regularly delivers to the public. The EMA did not recommend any changes to the product information displayed on the labels of these vaccines.

Now what

Analysts had already raised concerns that Moderna's stock price had risen too far, too fast. Bank of America analyst Geoff Meacham said on Tuesday that Moderna's nearly $200 billion market valuation was "ridiculous" and "unjustifiable on a fundamental basis." Meacham argued that to be worth that much, Moderna would need to deliver between 1 billion and 1.5 billion doses of its coronavirus vaccine each year through 2038. Additionally, Moderna's entire pipeline of experimental drugs would need to prove successful and generate total peak sales of $30 billion. 

Meacham believes those two assumptions are highly unlikely, so he repeated his underperform rating on Moderna's stock and $115 price forecast for its shares. Even after today's plunge, Meacham's price target is still 70% below the stock's current price near $385.

Today's news and Meacham's warning appear to have driven many investors to take profits and sell their shares in Moderna.