Moderna stock pulls back after massive one-day rally: analysts weigh in

Investing.com -- Moderna shares pulled back sharply on Thursday, giving up a small chunk of Wednesday’s record-breaking rally after the stock rocketed as much as 177% on data showing its personalized cancer vaccine, developed with Merck, slowed the spread and recurrence of melanoma. Merck shares had jumped 12.6% on Wednesday alongside Moderna’s surge.

The positive results rippled through drug industry stocks more broadly, as investors weighed the potential for more blockbuster treatments to emerge from the field. It marked the second major oncology breakthrough in recent months, following a separate drug that succeeded in extending the lives of people with pancreatic cancer, a notoriously lethal disease.

Moderna stock fell over 10% in premarket trading Thursday, while Merck slipped more than 1%. The pullback came a day after intismeran, the personalized mRNA vaccine partnered with Merck’s blockbuster immunotherapy Keytruda, hit its main goal in a late-stage trial by extending the time before melanoma returned in high-risk patients who had already undergone surgery.

Bank of America analyst Alec Stranahan upgraded Moderna to Neutral from Underperform following the data, more than quadrupling his price objective to $170 from $40. He called the readout "a watershed moment for Moderna," saying it allows the company to diversify away from infectious disease and potentially ease persistent capital overhangs.

Still, Stranahan flagged that key questions remain unanswered. "We still don’t know how much better the combo is versus Keytruda alone," he wrote, adding that recent checks with doctors suggest a hazard ratio of at least 0.8 on recurrence-free survival could be enough to support use. He said a hazard ratio of 0.6 to 0.7 at an upcoming medical meeting, likely the European Society for Medical Oncology conference, would be needed to turn more positive.

The analyst noted that pembrolizumab, Keytruda’s chemical name, has "set a high bar in adjuvant melanoma," pointing to prior trials showing strong results for the drug alone, which could compress the apparent benefit intismeran adds on top.

On Merck, BofA reiterated a Buy rating with a $166 price objective, framing the debate as shifting from a looming Keytruda patent cliff toward the drugmaker’s ability to execute on a broader pipeline.

BofA’s Moderna model now assumes $54 billion in unadjusted global peak sales for intismeran, with Moderna splitting economics evenly with Merck. Upside could come from expanding Keytruda’s use into patient groups where it currently underperforms, including PD-L1 negative and earlier-stage lung cancer patients, though the analyst cautioned this remains data-dependent.

Separately, RBC Capital Markets downgraded Merck shares to Sector Perform from Outperform, citing "unprecedented valuation for a company facing a significant loss of exclusivity (LOE) in 2-years, and modest interim growth."

"Further upside requires pipeline momentum to accelerate from already elevated expectations," RBC analysts added.

In a separate note, Morgan Stanley upgraded Merck to Overweight and hiked the price target to $179 from $116. "Recent success for MRK pipeline cancer drugs leads us to raise our est and we now project flat outer-year revs for MRK through the Keytruda patent cliff," analysts led by Terence Flynn wrote.

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