Balanced Legal and Fundamental Uncertainties Justify Maintaining a Hold on Moderna

Morgan Stanley analyst Terence Flynn maintained a Hold rating on Moderna yesterday and set a price target of $28.00.

Terence Flynn has given his Hold rating due to a combination of factors related to both legal and fundamental considerations surrounding Moderna. On the legal front, the mixed summary judgment in the Arbutus patent case creates uncertainty: the court rejected Moderna’s attempt to shift most vaccine-related claims to the Court of Federal Claims under Section 1498, leaving the company more exposed to potential liabilities on non-government sales of SpikeVax. At the same time, the court’s decision limiting Arbutus’s ability to rely on the doctrine of equivalents for key “molar ratio” patents means Arbutus must now demonstrate literal infringement, which is a higher hurdle and could reduce the overall risk to Moderna if its formulations indeed fall below the cationic lipid thresholds at issue. This combination of increased exposure on one legal front but a tougher path for the plaintiff on another yields a risk profile that is neither clearly benign nor clearly alarming.

On the fundamental side, Moderna’s share price and market capitalization already reflect a business in transition from COVID-19 vaccine dependence toward a more diversified pipeline, but near-term earnings visibility remains limited while these legal proceedings play out. The upcoming trial and expected jury verdict around late March introduce a binary event that could alter future cash flows and settlement or royalty outcomes, making it difficult to justify a more aggressive stance before there is greater clarity. In Flynn’s view, the balance between the potential downside from an adverse patent outcome and the upside from a favorable ruling or successful pipeline execution results in a risk/reward profile that is broadly aligned with the current valuation. Accordingly, these factors together support a Hold rating rather than a clear Buy or Sell recommendation at this time.

According to TipRanks, Flynn is a 5-star analyst with an average return of 10.4% and a 59.64% success rate. Flynn covers the Healthcare sector, focusing on stocks such as BioNTech SE, Bristol-Myers Squibb, and Eli Lilly & Co.

In another report released on January 30, TipRanks – Google also reiterated a Hold rating on the stock with a $49.00 price target.