Moderna shares surged by 9.5% to $32.75 on Tuesday, a significant reversal from recent bearish sentiment. Legal developments and renewed investor attention on the potential vaccine pipeline of the company boosted this notable increase.
This uptick comes after a difficult period in which the stock of the pharmaceutical company has fallen by more than 80% during the last year.
A coalition of medical groups filed a suit on Monday against US Health Sec. Robert F. Kennedy Jr. and Department of Health and Human Services to challenge recent decisions that removed healthy children and women pregnant from the COVID-19 vaccination schedule.
Plaintiffs claimed that the proposed changes posed a serious threat to the public’s health, and asked the court to declare them illegal.
Richard H. Hughes IV, a vaccine law specialist from George Washington University who is leading the lawsuit accuses Kennedy of trying to undermine public trust in vaccines.
Hughes said that the secretary’s intent was clear. “He aims to destroy vaccines.”
Plaintiffs include American Public Health Association and the American Academy of Pediatrics as well as other leading health organizations.
Analysts see gains as “a reversal of the peak negative investor sentiment”.
B. Riley Securities’ Mayank Mamtani believes that Moderna shares are likely to reflect “a reversal in peak negative investor sentiment.” He cites the recent litigation and upcoming meetings of vaccine advisory committees as possible short-term catalysts.
It is possible that the news helped to rebalance the sentiment of a stock market which had been heavily shorted.
Pfizer and Novavax both posted increases of 1.6%.
Mamtani stated that the latter benefitted from late-stage studies relating to COVID and flu combination vaccines as well as standalone influenza vaccines.
Why does MRNA struggle?
Moderna remains a difficult bet despite the gains of today.
The stock is down 72% in the last 12 months and 22% for the year.
Investors lost confidence last year when Moderna reported weaker sales of vaccines in Europe. This was attributed to the renegotiated agreement between Pfizer and BioNTech, which is a joint venture between Pfizer and BioNTech.
After the second quarter earnings of the company, there was a sharp sell-off.
Moderna has seen its revenue fall from 18 billion dollars in 2022, to $3 billion last year. This is an 83% drop.
The company expects sales to fall further in 2025, to $2.1 billion as the demand for COVID-19 continues to decline and it adapts to seasonal vaccine models.
Even though the market has recently bounced back, short interest is still high.
Moderna was the S&P 500’s second-most-shorted company as of mid-June. Its levels are only marginally lower than the peak of May.
Moderna lowered its revenue projections for 2025 by $1 billion in January and delayed its breakeven expectation by two years. The company cited delays with its product pipeline as the reason.
The stock of Moderna rallies after HHS news. Analysts say that the negative sentiment may change as new developments unfold.
