As of August 17th, Moderna's stock lost about 23% in less than a week, after flirting with an all-time high just below $500, leading investors to wonder if the vaccine stock rally is over. While investors ran toward biotech/pharmaceutical companies dealing with the Covid-19 vaccine last year, are they now wondering if the price of the biotechnology company will bounce back after this fall?
After reaching almost $500 per share at the beginning of the month, investors recently secured their profits by selling their positions, leading Moderna stock to dip to around $355. For some analysts, such as Geoff Meacham from Bank of America, Moderna's valuation is way too high. Meacham even said that the valuation is "unjustifiable on a fundamental basis", which could lead the stock price of the company to $115 per share.
However, he acknowledged that the company might still benefit from overly bullish market sentiment and positive momentum. Even with the recent fall, Moderna's stock remains a great investment, as it has gained more than 460% over the past 12 months. The company also provided better returns than some of its competitors, like Pfizer (+38%) and BioNTech (+408%), but can it last?
The vaccine stock could benefit from recent reports suggesting that the Moderna's vaccine is more effective against the Delta variant than Pfizer and BioNTech's vaccine. According to two reports posted on medRxiv and reported by Reuters based on more than 50,000 patients in the Mayo Clinic Health System, researchers found that Moderna's effectiveness against Delta variant infections dropped to 76% this month from 86% in early 2021, compared to 42% from 76% for Pfizer/BioNTech.
Regulatory authorities in the US - and around the world - are considering coronavirus booster shots as necessary to contain the virus through to the end of the year. As more and more countries agree to a third dose, Moderna's sales could benefit from required booster shots around the world. Moreover, according to the Financial Times, Moderna will raise Covid vaccine prices in some parts of the world. This is the case in Europe, where the company took advantage of the renegotiation of their contracts with the European Commission to increase its vaccine price, potentially going up from €19 to €21.50 per dose.
For these reasons and more, some investors believe that Moderna's stock hasn't peaked yet, which means that the current dip could be a good entry point. Of course, the valuation of the company is high, and it might be difficult for Moderna's stock to maintain the pace it followed for the last year and a half.
Will the upcoming demand for Modern'a coronavirus vaccine be enough to justify such high stock price levels? Will sales keep rising? Near-term developments about the world fighting against coronavirus will be closely watched by investors.
Should you buy Moderna stock now? Only you can decide. Think about your strategy, your goals, and your time horizon to determine if Moderna is a good buy right now. But always remember to protect your investments with money and risk management rules.