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5 Reasons Moderna May Prove Wall Street Wrong

By Adria Cimino – Sep 5, 2021 at 6:00AM

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And they might result in near-term and long-term share gains.

Most Wall Street analysts recommend buying or holding Moderna (MRNA -0.43%) shares. But they don't necessarily expect big gains in the coming 12 months. The average analyst estimate for that period is about $130 lower than Moderna's share price today.

It's true that Moderna's shares have climbed at the speed of light. The stock has increased nearly 300% so far this year. And that's on top of last year's 434% gain. It's logical to believe there may be a pullback from time to time or a slowdown in the pace of gains. But I'm not expecting a huge decline in this unstoppable coronavirus vaccine maker. Here are five reasons Moderna may prove Wall Street analysts wrong.

Four investors smile as they look at a computer in a casual office setting.

Image source: Getty Images.

1. Investors still love coronavirus stocks

Many worried that coronavirus stocks would be victim of "buy the rumor, sell the news." By that I mean rising on expectations of vaccine authorization, then falling after regulators authorize the product. But that hasn't happened. Shares of vaccine leaders Moderna and Pfizer (and its partner BioNTech) didn't lose momentum after the U.S. Food and Drug Administration (FDA) gave their vaccine candidates the nod. Vaccine makers farther behind in the race -- such as Novavax and Vaxart -- also are advancing this year.

Clearly, investors' interest in these stocks wasn't temporary. And today, both cautious and aggressive investors may find opportunities in this dynamic space. Moderna is a great pick for both: The stock's strong moves will please the aggressive investor. And the cautious investor will love Moderna's billion-dollar revenue and profit.

2. You can count on Moderna

Moderna has delivered a steady stream of good news since its work on the coronavirus vaccine began early last year. The clinical trial and authorization process went smoothly, countries signed up for major supply deals, and Moderna successfully ramped up production.

This year, Moderna has presented positive results from its booster trials and from a teen trial. It's submitted those results to the FDA.

This track record of success makes me optimistic about the vaccine program and Moderna's other work. Of course, in drug and vaccine development there always will be failures here and there. But Moderna has proved its strengths on many levels -- from science to production to management -- to keep failures at a minimum.

3. It's gained less than some rivals

Moderna's share price performance is impressive. But it isn't completely over the top compared with other coronavirus vaccine stocks gains last year...

MRNA Chart

MRNA data by YCharts

As for this year, Moderna's shares are outperforming Novavax and Vaxart. Those companies haven't brought a coronavirus vaccine to market yet. But Moderna's shares haven't gained as much as BioNTech.

MRNA Chart

MRNA data by YCharts

So, Moderna's share increase may not seem completely shocking to investors. It's possible that with upcoming catalysts, Moderna shares will head even higher. And that brings me to the next point...

4. Near-term catalysts

The next step for Moderna? We'll see if the FDA grants the biotech company authorization for the use of its vaccine in teens. Moderna submitted results in early June. So a decision may be imminent. The FDA also is likely to make a decision this fall regarding the use of a Moderna booster dose in already vaccinated adults. Positive news there should be a catalyst for more share gains.

And other catalysts should follow. Moderna is studying its vaccine in children. And it's working on a next-generation coronavirus vaccine. Contracts for 2022 and 2023 vaccine delivery as well as new variants and rising coronavirus cases also may push the shares higher.

5. A promising pipeline

And finally, there's more to Moderna than the coronavirus vaccine. The company's next breakthrough product may be a vaccine for cytomegalovirus (CMV). CMV is a common virus that's particularly dangerous for pregnant women and people with weakened immune systems. A vaccine for CMV doesn't exist. But Moderna's candidate has shown promise in clinical trials. The company plans to begin a phase 3 study this year.

Farther down the road, Moderna may produce other game-changers. The company expects to start a phase 1 trial this year for an Epstein-Barr vaccine candidate. There currently isn't an approved vaccine for that virus. Moderna also aims to start a phase 1 trial this year of an HIV vaccine candidate.

Success in these or any of the other 20 or so pipeline candidates is likely to drive the stock higher over the long term.

These points should support Moderna stock in the near term and over time. Sure, share gains may slow here and there. But I'm not overly concerned about that -- or about the average Wall Street price target. The whole picture shows us Moderna is probably just at the beginning of its success story. And as a long-term investor, that's what I like to hear.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool recommends Moderna Inc. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Moderna Inc. Stock Quote
Moderna Inc.
$175.63 (-0.43%) $0.77
Pfizer Stock Quote
$49.18 (-0.06%) $0.03
Novavax Stock Quote
$16.56 (0.12%) $0.02
BioNTech SE Stock Quote
BioNTech SE
$161.33 (4.18%) $6.48
Vaxart, Inc Stock Quote
Vaxart, Inc
$1.24 (-3.12%) $0.04

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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