Moderna’s 176% rally on cancer vaccine success puts focus on biotech stocks

Moderna shares skyrocketed 176% after the company produced positive results from a key cancer vaccine trial. The share price move may have been overdone but it left MRNA shares the second-best performing on the S&P 500 this year. The stock now trades about 50% above its average analyst price target.

Its experimental mRNA-based cancer vaccine was successful at preventing melanoma from returning or spreading in a late-stage trial of high-risk patients. The vaccine is used to treat skin cancer but it’s unclear just how applicable the mRNA technology is to other cancers. 

The share price reaction indicates investors are hopeful that the success could read across to at least eight other Phase 2 and 3 trials of the vaccine in a range of other cancers, including renal cell carcinoma, bladder cancer, non-small cell lung cancer and metastatic melanoma. Results of these are expected in late 2026 and 2027.

It is a treatment vaccine and not a prophylactic vaccine – you only use it if you already have the cancer. It’s applied alongside Merck’s Keytruda treatment. Merck shares closed 12% higher at an all-time high but the focus was on Moderna as investors pinned hopes on the clinical results delivering a shot in the arm for the company’s stock, which has drawn down significantly since its Covid high.

The biotech sector has seen a big boom of late - the $10.8 billion State Street SPDR S&P Biotech exchange-traded fund has surged 77% in the past 12 months, 

Screening for upside potential implied by analyst consensus price targets I’ve found a few interesting biotech names that could be worth some further investigation. Unlike Moderna these have not just soared well beyond where analysts think they trade.

Jazz Pharma (NASDAQ: JAZZ) - has nine approved drugs across neuroscience and oncology. Analysts have recently been raising price targets on the stock after its run up in the last 12 months and continued strong performance. The average analyst price target implies over 13% upside for the stock.

Insmed Inc (NASDAQ: INSM) - average analyst price target $200 implies over 50% upside for the stock, making for one of the highest upside profiles among commercial-stage biotechs. 

Argenx Se (NASDAQ: ARGX) – boasting a rapidly growing autoimmune franchise with label-expansion opportunities it’s also had some price target hikes this week. The average analyst price target implies around 10% upside for the stock.

Ionis Pharmaceuticals (NASDAQ: IONS) – offering multiple late-stage and commercial rare-disease assets the stock has had a bumpy time this year but analyst coverage remains bullish with the 22 of the 27 Wall Street analysts covering the stock giving it a buy rating and the average analyst price target implying 45% upside.

Offering a little less in terms of potential upside implied by the analyst coverage are Regeneron Pharmaceuticals (NASDAQ: REGN) and Vertex Pharmaceuticals (NASDAQ: VRTX). These have much more modest upside implied by consensus price targets but arguably offer lower-risk, more mature biotech exposure with consensus ratings for both stocks of Overweight.