Moderna is set to surge higher even after its epic 220% rally so far this year, according to Jefferies.

The firm initiated coverage of the pharmaceutical company Monday with a "buy" rating and a $90 price target, representing 45% upside from where the stock closed Friday.

The bullish rating hinges on Moderna's COVID-19 vaccine working and resulting in large government supply contracts, Jefferies equity analyst Michael Yee wrote in a Monday note.

"We think there is a good probability Moderna's vaccine will work and get at least emergency use authorization in 2021," Yee wrote. "We think a viable vaccine can generate billions in sales, which we see as reasonable given there would be high demand over the first 1-2 years."

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In the first full year of sales of its potential vaccine, Jefferies' model shows it could bring in $2 billion worldwide if roughly 50 million people get the vaccine at $50. This could grow to a peak of $5 billion between 2025 and 2026, according to the note.

There is also further upside, according to Yee, if significantly more people get the vaccine and the price is pushed higher. "This can quickly get to big numbers of $10-20B+ in theory," said Yee.

There are other catalysts that could drive shares of Moderna higher, including publication of the phase 1 details, preliminary data from the phase 2 study of patients in mid-2020, and potential phase 3 prevention data this year or next, or anticipated emergency use authorization or accelerated approval of its COVID-19 vaccine.

Moderna is one of many pharmaceutical companies and biotech firms racing to develop a coronavirus vaccine . The company has a 30,000-person late-stage study set to begin sometime in July.

Screen Shot 2020 07 13 at 9.56.25 AM
Screen Shot 2020 07 13 at 9.56.25 AM
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