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Why Moderna stock has been in rally mode this month

Hartaj Singh, Oppenheimer Analyst joins the Yahoo Finance Live panel with the latest on Moderna stock.

Video Transcript

[MUSIC PLAYING]

ZACK GUZMAN: Welcome back to Yahoo Finance Live. It's been an interesting year for Pfizer and Moderna, those two companies that we focused in on, on the vaccine front. And Moderna shares, in particular, are up almost 300% on the last year. But a big key piece of their growth ahead, boosters is coming into question now, as we hear from the WHO saying, hold off on booster use in developed nations, as well as the FDA, raising questions about whether or not they might be necessary. It could be impacting the growth ahead.

But for more on that, I want to bring on Hartaj Singh, an analyst at Oppenheimer who covers the names for us. And Hartaj, I mean, when you look at Moderna, it's interesting because we've been watching Pfizer make headways in vaccines for kids. That's another piece of this that would deliver some growth here. But on the boosters, I wonder how much of that had really been a piece of the growth we've seen thus far and how much could come off the stock if we see boosters maybe, indeed, pull back a bit.

HARTAJ SINGH: Zack, first of all, thank you for having me with you and Akiko. I really appreciate it. You know, look, the boosters had been something that we had modeled, you know, for a while since the vaccines got approved late last year. Pfizer and BioNTech, who we don't cover, you know, had indicated that boosters will be needed, as has Moderna. So it's not a question of if boosters come on the landscape, it's a question of when.

And this is where, actually, currently, you're seeing sort of this tension, right? And the tension is between sort of the scientists and regulators who want to see more data, who want to see more robust studies conducted, to see the effects of boosters, to see if there's any long-term safety from mRNA vaccines that changes over time versus, for example, politicians or the public, which is now getting probably a little bit tired and maybe a little bit fearful of a third, fourth, or fifth wave, depending on how you count it. So I think it's that tension that's leading to a lot of these discussions. Boosters, I think most likely will happen. Again, like I said, not a question of when-- if, but a question of when.

AKIKO FUJITA: Having said that, do you think the moves that we have seen, particularly with Moderna, on the back of these headlines are a bit overdone? I mean, obviously, the driving force here for the company has been the COVID-19 vaccine. But if you think about mRNA technology specifically, I mean, that's not the only application. Do you think investors are a little-- I mean, do you think these corrections or these pullbacks that we've seen are warranted?

HARTAJ SINGH: Yeah, Akiko, it's a really good question. You know, honestly, when you've been a big bull on Moderna like we have been since the IPO, one of the questions I have to ask myself was, was I prepared for the volatility off the second quarter call? Because a lot of the-- you know, a lot of the good news was already in the share price at $400 or $450 at that time.

And that volatility that's happening right now, we kind of thought, you know, when we went to a neutral was, we were a little bit worried that people didn't understand that so much was good news was already in the share price. And right now, as these discussions around boosters are happening, to your point, I mean, that volatility is there. Maybe it shouldn't be. I mean, the boosters will get approved. They're probably already in a majority, if not all, of the sales and earnings estimates for Moderna or Pfizer, BioNtech over the next two or three years.

So these sort of near-term reactions-- and, you know, if we'd had a buy on it, reacting to it all the time would not be a sort of a fundamental analysis, right? But I agree with you. I mean, some of these near-term moves around these headlines are probably overdone. And I think we'll probably calm down after a little while in the next couple of months or so.

ZACK GUZMAN: I mean, they don't seem crazy, the moves that we've seen lately. You know, the stock's still up, what, like, 1,300% in the last-- I mean, I was looking at it. We were using a comparison point to March in the pandemic when we saw the market really sell off. It's up 1,900%. You know, you compare it-- we were talking about Crocs yesterday. You know, I don't want to compare a vaccine maker that saved the world from a pandemic here to Crocs, but it's up just a little bit more than that.

I mean, when we talk about where this stock goes beyond this, right, and you build in years of boosters, that was really the question we've asked Stéphane Bancel many times on this show about what that looks like. And he seems to be thinking this is going to be a booster shot every year, similar to a flu shot, for COVID because it's here with us forever. I mean, do you kind of see the market looking at Moderna the same way?

HARTAJ SINGH: You know, I think the simple answer is yes, booster shots every year. The company, you know, Moderna-- you know, they are very science driven, very data driven-- has indicated that for the older folks over the age of 60, immune compromised, together, those and frontline workers make up about one-third of the overall US population. Same thing probably in Europe. They will need boosters every year. I think folks that are healthy, middle age, younger, maybe one to three years.

Now, you know, when Moderna says that, what that means to me is that we just need to see the data, right? So the simple answer is, I think there's a good likelihood we'll need boosters every year, but I'm not sure everyone will need boosters every year. It could be one to three years, depending on your age, your health status, and whether you have certain immune-related conditions or not.

AKIKO FUJITA: Hartaj, we're seeing the stock right now trading at $429 a share. How much higher do you think it can go, when you consider what we talked about earlier, this expectation of the booster already being built into the price?

HARTAJ SINGH: Yeah, so, you know, Akiko, the thing is that the boosters are probably, you know, not-- I don't think going to really cause a major progression in the share price going forward, unless-- we model them having a $10 billion sort of roughly COVID-19 business going forward from about 2024 onwards, when there's a lot more competition, a lot more choices from other COVID-19 vaccines. The real question is, what's next from the pipeline? They have cytomegalovirus, flu, RSV, other vaccines that are in mid to late stage development.

And the other thing is, there's a scarcity value to the platform. So if we see the platform close to 30 projects in the clinic, meaning in human beings, move forward, these three projects that I mentioned that are mid to late stage get closer to readouts in 2024, 2025, maybe as early as 2023 for flu. You're going to see sort of a multiple expansion because there's a scarcity value also to this franchise that a lot of people don't understand.

I mean, there's really only two or three, maybe four mRNA companies on this planet right now. And that scarcity value has sort of manifested itself in the multiple. And if we see the progression, you know, in the pipeline over the next two to four quarters, I imagine that's really where the fundamental move in the share price is going to come from, at least from the institutional side.

ZACK GUZMAN: Hartaj Singh bringing us the latest there on the Moderna and vaccine front. Appreciate the insights there, man. You've got to come back soon. Be well.

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