Moderna Shares Remain Undervalued Following Superior Data for Bivalent Omicron-Adapted Vaccine

Moderna (MRNA) produced data for its bivalent COVID-19 vaccine mRNA-1273.214 that we think puts the firm in a solid position ahead of the Food and Drug Administration advisory committee meeting scheduled for June 28, with data that supports the use of a new vaccine that targets both the original virus and the omicron variant. We’re maintaining our $232 fair value estimate, as we see this data supporting near-term dominance of mRNA vaccines heading into next winter (we expect Pfizer/BioNTech to have similar data available by the June 28 meeting as well). We continue to model $20.6 billion in Moderna 2022 COVID vaccine sales, in line with management guidance for $21 billion in COVID vaccine sales, and roughly $4 billion in annual COVID vaccine sales beginning in 2024. We see Moderna shares as undervalued, with significant potential for the firm’s mRNA technology to support further updates to COVID vaccines as well as additional respiratory virus vaccines in the near term, and a broader portfolio of mRNA-based therapeutics in the long run. While we’re encouraged by the firm’s progress and validation of its technology, we have yet to award the firm an economic moat.

Moderna’s bivalent COVID-19 vaccine strategy aims to offer durable protection for the 2022-23 respiratory infection season against the omicron variant, while also retaining protection against prior variants and potentially protecting against future variants that management believes could emerge this year. Moderna’s new vaccine was tested in a phase 2/3 trial against the original vaccine, in roughly 800 volunteers who had all received three Moderna COVID-19 vaccine doses prior to the study. The trial showed a superior neutralizing antibody response against omicron in volunteers receiving the bivalent vaccine over those receiving a fourth booster of the original vaccine, and this was true regardless of whether the individuals had been infected with COVID-19 prior to the study (seropositive) or not (seronegative).