Moderna scientists in a lab
Source: Moderna

Is It Time to Sell Moderna (MRNA) Stock and Book Profits?

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Jul. 20 2021, Published 10:17 a.m. ET

Moderna (MRNA) stock is up almost 200 percent this year. The biotechnology company’s stock has outperformed the broader market by a wide margin. So, what’s the forecast for MRNA stock in 2021? Will it continue to rise, or should investors book profits now?

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Moderna’s success came from its emergency-use authorized COVID-19 vaccine, mRNA-1273. In Nov. 2020, the company announced that its mRNA-1273 demonstrated 94.1 percent efficacy and was 100 percent effective at preventing severe COVID-19. On Jul. 20, Moderna announced that Takeda plans to buy and distribute an additional 50 million doses of its COVID-19 vaccine.

Moderna stock has been rising

On Jul. 19, Moderna stock rose 9.5 percent to close at $313.59. We can attribute the gains to the surge in COVID-19 cases and deaths highlighting the need for a harder and wider vaccine push. So far, mRNA-1273 appears to be holding up well against the Delta variant and other dangerous mutations.

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should i sell moderna stock
Source: Moderna

Moderna stock being added to the S&P 500

Moderna stock is expected to join the S&P 500 on Jul. 21. In the index, Moderna will replace Alexion Pharmaceuticals, which is being acquired by AstraZeneca. When a stock is added to the S&P 500, ETFs, mutual funds, and several other passive investment providers must include it in their portfolios.

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should i sell moderna stock
Source: Pixabay

Moderna’s stock forecast for 2021

According to MarketBeat, analysts' average target price is $168.69 for Moderna stock, which is 46 percent below its current price. Among the 17 analysts tracking Moderna, eight recommend “buy,” six recommend “hold,” and three recommend “sell.” Their highest target price of $250 is 20 percent below the stock's current price, while their lowest target of $80 is 74 percent below.

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On Jul. 15, Jefferies analyst Michael Yee raised his target price on Moderna stock to $250 from $170 and maintained a “hold” rating. Yee now expects Moderna to generate $21.2 billion in sales in 2021, up from $19.2 billion earlier.

Moderna stock looks overvalued

Moderna's NTM (next-12-month) EV-to-sales multiple of 5.1x makes it look expensive. To compare, biotech peers BioNTech SE and Pfizer are trading at NTM EV-to-sales multiples of 3.8x and 3.3x, respectively.

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Should you sell Moderna stock now?

It may make sense to sell Moderna stock at its current price and book profits, especially in light of its valuation. The stock has gained 200 percent year-to-date, and has risen 1,400 percent since the coronavirus pandemic became a point of focus in China in late 2019.

The competition for a COVID-19 treatment is increasing. Both Johnson & Johnson and AstraZeneca are planning to increase manufacturing of their respective COVID-19 vaccines, and Novavax appears to have a strong chance of obtaining emergency-use permission for its vaccine, NVX-CoV2373, in the coming months. As a result, Wall Street expects Moderna's sales to fall 17 percent to $15.8 billion in 2022. Furthermore, mRNA-1273 is Moderna’s only product that generates revenue.

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