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Citi Downgrades Moderna to Sell, Predicts 60% Plunge Despite Recent Rally
- •Citi analyst Geoff Meacham downgraded Moderna to a sell rating, despite raising his price target to $80, implying a 60% downside from current levels.
- •Moderna shares have surged 223% since August 19, following positive late-stage trial results for its experimental personalized cancer vaccine, intismeran autogene, combined with Merck's Keytruda.
- •Meacham argues that Moderna's current valuation is unsustainable, noting its $80 billion market cap is comparable to Regeneron's despite significantly lower expected revenue and earnings.
- •He believes that even assigning a 100% probability of success to intismeran's lead oncology programs only supports a price of ~$100/share, well below current trading levels.
- •Moderna shares fell nearly 6% in premarket trading after closing at $203.46 on Tuesday, with most analysts currently holding sideline ratings on the stock.
Key Questions Answered
Citi analyst Geoff Meacham downgraded Moderna to sell because he believes the stock is trading at unsustainable levels following its massive rally. He noted that Moderna's approximately $80 billion market cap approximates Regeneron's despite having materially lower expected revenue and earnings, resulting in an unjustifiable valuation with a negatively skewed risk/reward profile.
Moderna shares rallied after the company announced positive late-stage trial results for an experimental personalized cancer vaccine called intismeran autogene. When combined with Merck's Keytruda, the drug met its goals in over 1,100 patients with higher-risk or advanced melanoma.
Citi raised its price target for Moderna to $80 from $60, which still implies a 60% downside from the stock's Tuesday close of $203.46. Following the downgrade, Moderna shares fell nearly 6% in premarket trading on Wednesday.
