Moderna’s Lot Recall Is a Blot Despite Its Recent 2nd Covid-19 Booster Approval

Stocks to sell

Moderna (NASDAQ:MRNA) just had a second recall of its Covid-19 vaccine due to contamination. Reuters reported that Moderna recalled 764,900 doses of its Covid-19 vaccine made by its contract manufacturer Rovi, based in Spain. That could hurt MRNA stock going forward, despite some other recent good news.

The problem is this is the second time within a year that this contamination has occurred. This time a vial was found contaminated by a foreign body. It did not disclose what was in the vial. Even though this was one vial, Moderna distributed the lots for this vial in January throughout Norway, Poland, Portugal, Spain, and Sweden.

The company previously recalled doses previously distributed in Japan after authorities stopped the use of some of the does. It had to recall three batches of Covid-19 vaccine after an investigation found stainless steel contaminants in some vials.

That puts a blot on a company that has successfully distributed over 900 million doses of its Covid-19 vaccine worldwide. And recently on March 29, Moderna received Food and Drug Administration (FDA) emergency use approval (EUA) for a second booster dose of its vaccine. That news along with the company’s huge revenue and earnings prospects this year of over $22 billion should have pushed the stock higher.

Impact on MRNA Stock

However, MRNA stock is drifting lower. Year-to-date it’s down 36.7% as of Friday, April 8, at $160.84, from $253.98 as of the end of 2021. Moreover, analysts forecast that 2023 revenue could drop significantly to just $10 billion from $22 billion this year.

That raises its forward price-to-earnings multiple from just under six times this year to about 16x next year. Investors may be concerned that a decline in Covid-19 cases going forward could hurt its earnings. That shows that its valuation at $60 billion could be vulnerable.

Moreover, minor safety incidents don’t hurt the prospects for MRNA stock and its perceived safety in consumers’ minds. But declining cases might hurt MRNA stock’s price.

On the date of publication, Mark Hake did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

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