Regeneron's Stock Forecast Is in Question as Omicron Variant Spreads

With the highly mutated omicron variant of the COVID-19 virus officially in North America, the public has questions about the continued efficacy of existing vaccines and drug therapies. One such drug therapy is FDA-approved Regeneron, which came into the spotlight when former President Donald Trump used a Regeneron cocktail as treatment when he had COVID-19.

The omicron variant is unique because it contains 32 mutations in its spike protein alone, which is a lot more than any other COVID-19 variant (even the highly contagious delta). Will omicron reduce Regeneron's efficacy as a COVID-19 treatment and—if so—what will happen to the publicly traded stock?

On Nov. 30, Regeneron Pharmaceuticals (NASDAQ:REGN) announced that its drugs (including the antibody-drug) could be less effective against the omicron variant.

The drugmaker isn't alone—major vaccine maker Moderna admitted similar concerns. However, Regeneron's efficacy against the virus was already lower than that of any U.S. vaccine.

According to the company, "There may be reduced neutralization activity of both vaccine-induced and monoclonal antibody-conveyed immunity."

The true impact on Regeneron's efficacy hasn't been seen yet, but it's likely to be lower than the current rate. Regeneron released data about its antibody drug on Nov. 8 that stated it reduced the likelihood of an uninfected patient getting COVID-19 by 81.6 percent in the 2–8 months after the shot. In comparison, Pfizer's and Moderna's vaccines are both 95 percent effective for the first six months.

REGN stock has fluctuated a lot over the last few months. As fears increase about the omicron variant, trading activity is on the rise. The stock increased about 2.8 percent over the weekend, but it has dropped and evened out those gains.

Regeneron stock hit its peak on Sept. 3 at a price of $679.57 per share and it's trading at $643.91 as of Nov. 30. Investors know that researchers will have to step up their game. They can't rely on outdated data that doesn't reflect the new variant.

Wall Street analysts' latest forecasts for Regeneron stock were published prior to the omicron variant being identified in South Africa. At the time, the average 12-month outlook was $710.09, which is a 10 percent premium on the current price.

Now, the true forecast will likely be adjusted, but it will take analysts some time to catch up considering all the unknowns. If not a buy, Regeneron could still be a solid hold for those already invested.

One thing that traders with existing positions are banking on is that Regeneron already has updated antibody research in the works. Regeneron's CEO said that the company will have to constantly adapt its drugs to keep up with a continuously evolving virus, which could put a damper on shareholder value.

For the sector, vaccine stocks like Moderna (NASDAQ:MRNA) and BioNTech (NASDAQ:BNTX) are considered a safer target considering their higher overall efficacy.