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(Bloomberg) – Major Covid-19 vaccine makers Moderna Inc. and BioNTech SE set recent records amid a rout in biotech stocks on Tuesday.
Moderna shares soared earlier, rising as high as 2.7% to briefly cross $ 200 billion in market value before falling 6% amid a wider sell-off in tech and healthcare stocks. The Nasdaq Biotech index, on which Moderna has a weighting of nearly 15%, slipped to 2.1%.
Prior to today’s crisis, both companies had each grown over 480% in the past year to record highs. Pfizer Inc., BioNTech’s on-the-spot partner, which has a comprehensive list of other marketed drugs behind its valuation, closed at a 21-year high on Monday as investors piled on related stocks vaccines.
New guidance on the need for boosters could offer stocks their next step. All three drugmakers have increased their sales forecasts on Covid injections over the past two weeks, with Pfizer estimating revenue this year at $ 33.5 billion out of three billion doses manufactured.
With the delta variant spreading worldwide, US virus expert Anthony Fauci has said immunocompromised people should be given additional injections, and investors are waiting for the Food and Drug Administration to present new guidance on who else might as well. receive a third blow.
“It becomes a self-fulfilling prophecy, because if you don’t have it, you’re obviously underachieving,” Jefferies analyst Michael Yee said of Moderna in a video note. “Everyone has to buy it.
The companies got the first emergency approvals for the virus and slowly built a case on the need for booster vaccines, although there has been some setback. Pfizer plans to seek regulatory clearance for a third injection of its vaccine while Moderna has yet to determine its dosage before filing.
A handful of countries, including Thailand and Israel, have distributed new doses to certain groups of people who have already been vaccinated, while the FDA has yet to determine when such injections might be needed. The agency is expected to publish its strategy for boosters in September, according to a Wall Street Journal report.
Goldman Sachs analyst Salveen Richter raised his price target to $ 461 from Moderna’s $ 299 on Friday, while Barclays analyst Gena Wang raised his to a high of $ 463 on Wall Street, but the action exceeded those new targets in a rally on Monday. Yet the very high valuations of these stocks face unexpected resistance on Wall Street. Biotech analysts stand out for their generally bullish outlook for stocks in their hedging, but Moderna has more holds than buys and a price target that involves a roughly 40% drop to Monday’s closing price.
For Yee and bank strategist Will Sevush, tech and innovation funds have been driving the rally rather than hedge funds and investors who traditionally specialize in healthcare stocks. Investment advisers are currently the largest shareholder base along with BlackRock Inc., Vanguard Group Inc. and Morgan Stanley among Moderna’s top investors, according to Bloomberg data.
“They’re not fundamentally negotiating,” Sevush said. “They are in the air rare.”
While Yee rates Moderna with a price target of $ 425, below the current trading range, he expects booster shots to be available by 2022. The company is also expected to have vaccine results. against the flu at the end of 2021.
“This story is not going to end,” Yee said.
(Updates stock price movements and charts.)
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