Competitive pressure could impair Moderna Inc's MRNA ability to take advantage of its strong position in the coronavirus vaccine race, according to an analyst at SVB Leerink.
The Moderna Analyst: Mani Foroohar downgraded Moderna from Market Perform to Underperform and lowered the price target from $58 to $41.
The analyst initiated coverage of the stock in July at Market Perform with a $65 price target.
The Moderna Thesis: SVB Leerink's newly bearish stance is due to Moderna ceding its lead in the clinical development of its mRNA-1273 vaccine for SARS-CoV-2; rivals pocketing multiple large COVID-19 vaccine contracts; and the risk of reduced end user demand due to fears that vaccines could be rushed to the market under emergency use authorization, Foroohar said in a Tuesday downgrade note.
These factors make a durable market with oligopoly pricing unlikely, the analyst said.
The probability of Moderna securing emergency use authorization in the fourth quarter is high, but the "speed to market" has fallen behind that of competitors, he said.
Even with aggressive assumptions, there is no avenue to confidently predict beats versus 2021 estimates, Foroohar said.
Longer-term estimates have started to rationalize from the highs this summer but are still inflated, the analyst said.
The rerating of consensus estimates is being accompanied by heightened headline risk, with increasing media scrutiny of aggressive insider selling, he said.
"As the Street digests the changing competitive environment, we believe shares will continue to face pressure ahead of presumptive EUA and first commercial sales this winter."
SVB Leerink sees Moderna shares underperforming amid competitor dataset releases, contract wins and commercial launches, as its valuation comes to reflect secular challenges in the key end market.
MRNA Price Action: At last check, Moderna shares were slipping by 7.68% to $57.79.
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