Why the shares of Moderna, Novavax and BioNTech fell today

What happened

Actions of Modern (NASDAQ: mRNA), BioNTech (NASDAQ: BNTX), and Novavax (NASDAQ: NVAX) fell 4%, 9% and 11%, respectively, on Monday, as investors pulled back from previously high-flying vaccine stocks.

So what

Investors looking for ways to protect and increase their wealth during the pandemic have sought refuge and opportunity in the actions of major vaccine makers. Moderna, BioNTech and Novavax, in turn, have delivered searing gains to their shareholders in recent months. Even after today’s declines, their stock prices have risen by 105%, 254% and 318% respectively so far in 2021.

Yet after their sharp rise, analysts have warned in recent days that these vaccine stocks may have reached levels unjustified by their earnings outlook. For a, Bank of America Analyst Geoff Meacham argued last week that Moderna’s market valuation was “ridiculous” even using optimistic sales forecasts for its COVID-19 vaccine and the entire pipeline of investigational drugs. Because of this, Meacham warned that the stock could drop as low as $ 115 per share, or about 69% of Moderna’s current price, close to $ 374.

And on Friday, SVB Leerlink analyst Daina Graybosch assigned a price target of $ 293 for shares of BioNTech. That’s 15% below the current share price, near $ 343. “We do not anticipate the extended durability of BNT162b2 [BioNTech’s COVID-19 vaccine] revenue streams that could support the rise in the current market valuation, ”said Graybosch.

Now what

While much of Moderna, BioNTech, and Novavax’s early gains were justified by the success of their vaccine development efforts, it appears their stocks may have been propelled to unreasonable heights by momentum-driven traders. The momentum, however, goes both ways. And with those vaccine stocks dropping sharply in recent days, it is possible that further declines are ahead.