Shares of Moderna (NASDAQ:MRNA) are up 11% over the last week, including Monday's 9% surge. Gains appear to be related to talk about a potential resurgence of COVID-19 this fall, including the current prominent EG.5 strain (Eris) and talk about a new strain the CDC and WHO is actively monitoring, BA.2.86 (Pirola). Over the weekend, the Biden administration said it will urge all Americans to get a booster shot for the coronavirus.
In a note to clients Tuesday, Oppenheimer analysts highlighted that Moderna could in fact benefit from early COVID-19 trends.
"The season for respiratory diseases - especially COVID-19 - is starting to ramp, with various leading indicators for COVID-19 (e.g., respiratory ER visits, wastewater surveillance data, laboratory data, etc.) demonstrating meaningful upticks the past few weeks," they commented. "While these trends are still historically low (vs. 2020-22), we believe that changes in U.S. COVID-19 market dynamics will make 2023/24 an interesting season for COVID-related stocks."
In recent months, investors' concerns have arisen regarding the possibility of a notable deceleration in the sales of COVID-19 vaccines during the 2023/24 period, the analysts highlighted. This situation has had an impact on companies under consideration, such as MRNA, as well as on other related entities like Pfizer (NYSE:PFE), BioNTech SE (NASDAQ:BNTX), and Novavax (NASDAQ:NVAX). The shift of the U.S. market towards a commercial framework in 2023, characterized by a more intricate purchasing structure, has led to decreased visibility on the situation.
Last season, the U.S. Dept. of HHS acquired about 170 million COVID-19 vaccine doses. For 2023/24, Moderna and its competitors are assuming a ~50% decrease in vaccines purchased in the U.S., or about 50-100M doses.
"We believe that if the COVID-19 2023/24 season is less benign than expected, MRNA will likely be the prime beneficiary," the analysts stated. "The company (1) is better prepared for the commercial market than a year ago, (2) already has robust clinical data (vs. mouse data for mRNA competitors), (3) has arguably a better mRNA vaccine, and (4) possesses a better mRNA transportation/storage profile."
The analysts added that Moderna stands to gain from the shift in the U.S. market, moving from government funding to a more commercially oriented approach. The company's established strengths could potentially translate into share gains in the U.S. COVID-19 market.
"We believe Moderna could benefit as the U.S. transitions from a government-funded to a commercial market. MRNA's estimated historical 25-35% U.S. COVID-19 market share could benefit from the company's strengths (clinical data, storage, etc.)," the analysts added.
"While we have little visibility into the 2023/24 end-user demand for COVID-19 vaccines, early trends, other respiratory disease comps, and MRNA's strengths could surprise to the upside for the company," the analysts concluded.
Despite the positive comments, the analysts maintained a Perform rating on Moderna.