(Bloomberg) – Moderna Inc. joined the S&P 500 on Wednesday, becoming the most profitable stock of the year – per mile.
The move limits the transformation of a drug maker from an early-stage biotech company to a vaccine maker supplying Covid vaccines to the world. A gain of just over 207% in 2021 allows Moderna to surpass the current leader in the index, L Brands Inc., which is up about 104%.
Ahead of inclusion in the benchmark US, Moderna shares hit new highs, surging more than 30% in four sessions before falling 2% on Tuesday. Its shares closed up 4.5% at $ 321.11, another all-time high, with a market value of around $ 129 billion.
Moderna’s growth has come largely from innovation in messenger RNA vaccines, which use body cells as mini-factories to make vaccines. This has led some Wall Street analysts to dub it “Tesla of biotech,” as the Cambridge, Massachusetts-based company charted a course that could change treatments for infectious diseases.
The company secured its place in the top echelons of US biotechnology after AbbVie Inc. and Amgen Inc. – after receiving an emergency authorization to vaccinate against Covid-19 last December, just a week behind Pfizer Inc. and BioNTech SE.
But the Tesla parallel doesn’t necessarily bode well for Moderna’s stock. The day before Tesla was included in the benchmark in December, it fell about 6%, compared with a nearly 18% rise in the index. Other recent index additions have also shown weak results.
The stocks of the companies in the index usually rally ahead of inclusion as investors adjust their portfolios. Moderna shares were already down on Tuesday, closing 2% below $ 307.33.
Skeptics of Moderna’s surge in recent months point out that its pipeline is in the early stages of human trials, while the market for Covid-19 booster injections has yet to be fully understood.
However, recent laboratory results show that Moderna’s shot produces antibodies against the Covid-19 Delta variant. Goldman Sachs analysts also predict that Moderna could launch a new flu shot by 2023, and a combination of the flu and Covid-19 vaccine as early as 2024. The company is also working on new vaccines and drugs for cancer and HIV. like Zika and heart disease.
A poll of 191 hedge funds and institutional investors from Jefferies’ sales force found that approximately 73% of respondents expect Moderna shares to change little or fall 20% or worse by the end of the year. Investors were most focused on the results of delta boosters and flu shots, while only 13% were long at Moderna.
“After all, we still don’t know who is buying the stock,” Jefferies strategist Will Sevush wrote to clients. “There are very few bulls and they are very rare.”
Sales of mRNA-1273, as the Moderna Covid vaccine is called, is likely to surpass the Wall Street consensus of $ 18.1 billion in 2021, according to Goldman, according to Goldman. But even Wall Street’s high $ 299 price target from Moderna’s biggest enthusiast – Goldman analyst Salvin Richter – suggests further retreat.
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