What if Moderna is actually undervalued?
A common subject of debate in biotech is whether Moderna’s valuation, which has roughly quadrupled due to its potential coronavirus vaccine, has departed from reality. Michael Yee, an analyst at Jefferies, entered the conversation with a novel take: Actually, Moderna shares are too cheap.
In a note to investors yesterday, Yee set a share price target that was about 45% higher than Moderna’s current value, suggesting the company, valued at about $7 billion as recently as January, is in fact worth $35 billion. Here’s Yee’s case: If Moderna’s vaccine works, it can make upward of $5 billion a year by charging as little as $50 a dose, regardless of how many competing products there may be. And that will set a financial and scientific safety net for the company’s many other projects, he argues.
Yee’s note sent Moderna’s share price up more than 17%, suggesting his case was fairly convincing on Wall Street. But it’s worth remembering that the “If” in the paragraph above is a weighty one. Not only does no one know if Moderna’s product will work; there’s still debate over the definition of “work” when it comes to vaccines for the novel coronavirus.
In a note to investors yesterday, Yee set a share price target that was about 45% higher than Moderna’s current value, suggesting the company, valued at about $7 billion as recently as January, is in fact worth $35 billion. Here’s Yee’s case: If Moderna’s vaccine works, it can make upward of $5 billion a year by charging as little as $50 a dose, regardless of how many competing products there may be. And that will set a financial and scientific safety net for the company’s many other projects, he argues.
Yee’s note sent Moderna’s share price up more than 17%, suggesting his case was fairly convincing on Wall Street. But it’s worth remembering that the “If” in the paragraph above is a weighty one. Not only does no one know if Moderna’s product will work; there’s still debate over the definition of “work” when it comes to vaccines for the novel coronavirus.
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