Moderna Shares Surge on Cancer Vaccine Hopes... "Focus on Development Timeline Over Earnings" [Click eStock]

Daishin Securities: "Validation of clinical results matters more"

Shares of Moderna, the U.S. biotechnology company that developed a COVID-19 vaccine, surged on hopes for its cancer vaccine. Daishin Securities said on October 28 that “validation of clinical results matters more than quarterly earnings” ahead of the company’s third-quarter earnings report scheduled for November 6, and maintained its “Neutral” rating. It did not issue a price target.

Medical staff organize syringes containing Moderna vaccines at a hospital in Seoul. Yonhap News Agency

Cho Jae-woon, a researcher at Daishin Securities, said, “What changed the outlook was not quarterly earnings but the Phase 3 data for an adjuvant melanoma vaccine being jointly developed with Merck.”

After positive Phase 3 results were announced on August 20, Moderna’s share price roughly doubled. Detailed results presented at the ESMO Congress on October 23 showed that the vaccine reduced the risk of death or recurrence by more than 40%. Profit-taking followed immediately after the results were released, wiping out about $24 billion in market capitalization.

Price targets from U.S. brokerages also vary widely. TD Cowen raised its target from $40 to $90, Piper Sandler lifted its target from $167 to $230, while William Blair downgraded its rating from “Outperform” to “Market Perform.” Price targets for the same data range from $90 to $230. The company’s valuation varies widely depending on assumptions about the clinical results’ commercial potential.

Cho said that the development timeline and cash management plan management presents with the earnings report are more likely to drive the share price than earnings figures. The company raised its year-end cash and investments guidance to $4.7 billion-$5.2 billion. However, with an operating margin of -562.1% in the second quarter, it is too early to say that its earnings structure has improved.

Specific timelines for plans to use the full melanoma program dataset, pursue priority review designation, and secure production capacity for a launch could provide an upside catalyst. Conversely, if third-quarter revenue falls short of the upper end of guidance, $882 million, and the timeline remains unclear, downward pressure could intensify.

“Expectations have already been priced in to a considerable extent,” Cho said. “There is not sufficient reason to change our Neutral rating until assumptions about the commercial potential of the full dataset and the regulatory timeline are confirmed.”

This content was produced with the assistance of AI translation services.