Moderna (NASDAQ:MRNA) Makes Explosive Gains in Pre-Market

While most of us were still shrugging off our collective post-Thanksgiving turkey coma to get ourselves ready for another week back to work, the folks at Moderna (NASDAQ:MRNA) made some very exciting new gains. The company's stock price actually gained better than 11% in pre-market trading on news about its own candidate in the COVID-19 vaccine stakes, which is looking like a very solid entrant into the growing field.

A Stable Candidate

The good news coming out of Moderna was that the company's latest data from its coronavirus vaccine trials puts Moderna's candidate at better than 94% effectiveness. That's enough for Moderna to make a push into the broader market, and as such, the company is now seeking emergency use authorization from the Food and Drug Administration (FDA), starting today.

Moderna's latest research actually builds on earlier results the company released, drawing on tests with 30,000 volunteers contained therein. The numbers do bear out well, with the study finding just 11 people who got the active vaccine still coming down with COVID-19, as compared to 185 who didn't get the actual vaccine but still got the disease anyway. This is on par with earlier results announced at Pfizer (NYSE:PFE), and reports also suggest that this vaccine also helps to prevent severe cases. Given that most cases of COVID-19 aren't especially severe anyway, this is good news, as even the few severe cases seen can be knocked down another peg.

Looking Good on Several Fronts

Successful vaccine testing is certainly good news for Moderna, as having a horse in this race will give it access to a very receptive market and a solid source of incoming cash flow for a while to come. Such moves have caught the attention of the analyst community in recent days, our latest research details, but to perhaps oddly mixed results.

Moderna's consensus rating remains at a “buy”, but the proportions have been slipping for the last six months. Currently, the company sits at two “sell” ratings, four “hold” ratings, and 13 “buy” ratings. From last month, that's one new “sell” rating, two new “hold” ratings, and one less “buy”. Paradoxically, even as the overall analyst sentiment toward Moderna has been in decline, the company's consensus price target has only increased. There was a small dip between three months ago's figure and last month's, but now, the company's price target is sitting at $96.72, the highest number seen in the last six months. Amazingly, that number actually represents a downside of around a third, as the company is trading at $146.31 as of this writing.

How Much Does The Competition Matter, Anyway?

The biggest problem Moderna immediately faces is the sheer number of horses already in the race. We've not only seen Pfizer in on this action, but so too have we seen AstraZeneca (NYSE:AZN), Johnson & Johnson (NYSE:JNJ) and other firms also struggle to land a slice of the COVID-19 vaccine market. Moreover, we've also got various therapeutic agents making a play, like the Regeneron (NASDAQ:REGN) release.

The bad news is that this inherently limits the size of the market that each can get. With demand likely to be absolutely pegged from the moment it opens, the market will effectively be split evenly. There's not a lot of time for a marketing campaign to make much influence, and even if there were, potential customers just want “a vaccine” not “this company's vaccine.” That will pretty much allow every company involved market share up to the limits of its ability to produce. Given the size of the market, each company will likely be able to sell everything it makes.

So a competitive market for coronavirus vaccine likely won't be an issue. Though the market is inherently limited, production issues will likely make these limits an effectively moot point; production will aspire to full utilization of the market, not the other way around. Throw in Moderna's work on other fronts—it's been working on a range of other vaccines for some time now, including models for the Zika disease as well as the H7N9 flu, among others—and Moderna makes itself a reasonably attractive buy.

On a final point, Moderna has been working on its vaccine by itself; Pfizer, you'll remember, has partnered with BioNTech (NASDAQ:BNTX) to produce its offering, and AstraZeneca has been working with the University of Oxford. Thus, any gains it derives from its vaccine sales stay wholly in-house, unless it subcontracts a bit to ramp up production later. That clear focus for revenue gives the company that much extra edge, and may well make it the horse to back going forward.