BMO’s George Farmer says he believes ‘best-case scenario’ is already priced into the stock
Shares of Moderna Inc. dropped Tuesday, to pull back from the previous session’s record close, after BMO Capital analyst George Farmer recommended “taking some profits” as the best-case scenario on the company’s COVID-19 vaccine candidate is already mostly priced in.
The stock MRNA, -4.90% fell 5.2% in active afternoon trading, which would snap a four-day win streak, and mark just the second loss in 11 sessions. Trading volume of 22.3 million shares was more than double the full-day average of about 10.0 million shares.
On Monday, the stock soared 9.6% on volume of 70.9 million shares to close at a record $97.95, after the company said data from a late-stage trial demonstrated that mRNA-1273 was nearly 95% effective. Moderna also said the vaccine candidate remained stable at standard refrigerated temperatures longer than previously expected.
Moderna’s announcement came a week after Pfizer Inc. PFE, +1.84% and BioNTech SE BNTX, -5.01% said their vaccine candidate was more than 90% effective, but needed to be stored at ultra-low temperatures.
BMO’s Farmer cut his rating on Moderna’s stock to market perform from outperform, but increased his price target to $109 from $94. His new target was 11% above Monday’s record closing price.
Farmer said he downgraded the stock, because he only sees “limited upside” from current trading levels following announcement of the positive trial data.
“We believe a near-term best-case scenario is is mostly reflected in shares, including an mRNA-1273 [Emergency Use Authorization] before year-end and full approval mid-2021,” Farmer wrote in a note to clients.
Despite his concerns over valuations at current prices, Farmer said he remains upbeat on Moderna’s potential over the longer-term.
“Although we recommend taking some profits, we think, nevertheless, that the new proven potential of [Moderna’s] RNA/LNP platform establishes the company as a new vaccine development powerhouse,” Farmer wrote.
Moderna’s stock, which has run up 38.3% over the past 11 sessions, has skyrocketed nearly fivefold (up 374.6%) year to date, while the SPDR Health Care Select Sector exchange-traded fund XLV, -0.65% has gained 9.1% and the S&P 500 index SPX, -0.47% has advanced 12.1%.