August has been a great month for the shares of Merck & Co., Inc. (NYSE:MRK) and Moderna Inc. (NASDAQ:MRNA), to say the least. The former’s stock closed 12.6% higher and the latter’s stock closed 176% higher on August 19th. The stocks surged after a major announcement from Moderna Inc. (NASDAQ:MRNA) shared the results from its late stage melanoma vaccine. This trial combined MRNA’s products with Merck & Co., Inc. (NYSE:MRK)’s well known Keytruda cancer drug to demonstrate that the pair worked together in creating a customized response to attacking cancer. Cramer commented on the development on August 24th in his morning appearance:
“Let’s use the drug stocks as a good example. So, yes, Merck does go up cause of Moderna, and from what I can tell, that is a real serious, I mean my daughter had melanoma, and I like, everybody else who had that, just immediately call the encologist, and calls the dermatologist. It was encouraging for both.”
For Moderna Inc. (NASDAQ:MRNA), the development was a nice breath of fresh air. Ahead of the surge, the stock was up by a modest 13% year-to-date. Moderna Inc. (NASDAQ:MRNA), the firm whose vaccine made headlines in the coronavirus pandemic, had struggled after the pandemic ended. As of its second quarter, the firm was bleeding cash as its net loss of $782 million far outstripped its revenue of $145 million. Additionally, Moderna Inc. (NASDAQ:MRNA)’s norovirus vaccine had also missed the success criteria for early results. With the results of the melanoma vaccine out, the bullish and bearish viewpoints about the firm depend on whether the results and a recent FDA flu vaccine approval justify a thorough re-rating of the stock.
Among the recent bullishness for the stock, Bank of America and Morgan Stanley stand out. The former has raised the share price target to $170 from $40 and upgraded the rating to Neutral from Underperform, as it commented that the melanoma vaccine had changed the narrative. The latter bumped the target to $89 from $39 and discussed Moderna Inc. (NASDAQ:MRNA)’s platform strength.
As for Merck & Co., Inc. (NYSE:MRK), its Keytruda vaccine is among the top selling vaccines in the world. With Keytruda accounting for roughly 50% of the firm’s $16.6 billion of Q2 revenue, the vaccine, naturally, sits at the heart of the narrative. The drug’s sales managed to grow 5% in the second quarter despite being in the market for years. Consequently, the performance of other drugs are important for the bullish viewpoint.
During the second quarter, Merck & Co., Inc. (NYSE:MRK)’s arterial hypertension drug Winrevair’s sales grew 75% annually to $588 million, while Welireg’s sales grew by 67% to $271 million. Yet, at the same time, the need to develop business is taking a toll on the firm’s bottom line. Merck & Co., Inc. (NYSE:MRK) posted a net loss in its second quarter while headwinds from generics grew to $2.5 billion in 2026.
Shifting towards the hedge funds and valuation, during Q2, 49 out of 1,006 hedge funds covered by Insider Monkey had held a stake in MRNA, which marked a drop from the 52 in Q1. Some notable reductions came from D E Shaw (-97%) and Bridgewater Associates (-85%). As for MRK, 101 funds had held a stake in Q2, up from 98 in Q1. Fisher Asset Management bumped its stake by 46% to $4.9 billion. Price-to-sales wise, MRNA is more richly valued as its multiple of 28.28 is higher than MRK’s 5.83. Yet, 16% of the shares are also sold short.
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Disclosure: None.
