Stock Moderna: ready for a post-COVID environment?


Vaccessories manufacturer Moderna (mrna) has seen its stock rise recently on the back of the broader market rally and strong quarterly results that were better than expected. Despite canceled COVAX (COVID-19 Vaccine Global Access) orders, Moderna is sticking to its original vaccine sales guidelines. Demand for vaccines could persist as new variants could pose a threat to the public in the future. No doubt COVID-19 has been tough, but it’s not gone yet. Even when COVID-19 ends, Moderna could still thrive.

When it comes to COVID-19, the rapid rate of mutation and seasonal surges could set the stage for many years of demand for vaccines. This is good news for Moderna’s business. However, COVID-19 remains the company’s only source of failure. This begs the question: what happens to Moderna once COVID-19 is over?

Moderna has an extensive non-COVID related mRNA pipeline. Indeed, mRNA treatment of other diseases, including cancer, holds great promise.

Personalized cancer vaccines could be extremely promising. However, these vaccines are still in early trials and may be years away from full approval. While I wouldn’t overlook the potential blockbusters in the Moderna pipeline, it’s hard to gauge what will hit and miss.

Indeed, the biotechnology industry is full of successes and failures. Either way, I expect Moderna to continue to put its COVID-19 cash flow to good use while it lasts. Given so much uncertainty, I remain neutral on the title.

Stock Moderna: Too many post-COVID-19 risks?

I have no idea when the demand for COVID-19 vaccines will drop to zero. Given the likelihood that this pandemic will linger for quite some time, there’s a good chance that Moderna’s COVID-19 cash cow won’t go away so quickly. Currently, the 5.3x earnings multiple suggests that Moderna has over-earned in the past and could be in dire straits once demand for COVID-19 vaccines gradually declines.

Unlike Pfizer, which is more diversified (DFP), Moderna faces a significant downside if the pandemic ends and demand for COVID-19 vaccines drops to zero. Moderna’s cash flow may be too dependent on COVID-19. However, the pipeline is diverse and could start producing some intriguing products gradually over the next few years.

Also, like Pfizer, Moderna has reinvested heavily in its business to focus on the next big drug or treatment. With such expertise in mRNA technology, Moderna has the ability to create even more revolutionary products to help fight various diseases. The launch schedule for the products in the pipeline remains rather unclear. In an era of rising rates, investor patience for forward-looking growth stocks is at an all-time low.

Either way, I think the COVID-19 boosters can hold the fort until Moderna pulls back the curtain on its next big innovation. Make no mistake – Moderna is innovating at a rapid pace. It’s hard to gauge the magnitude of future cash flow at this point, given the nature of the industry and the fact that many of us haven’t heard of the company in the years leading up to 2020. .

With approximately 29 clinical mRNA candidates in development, the odds of something major coming out of the pipeline in the next 10 years are high. At current valuations, these developments appear to be ignored by the market, which overemphasizes deteriorating COVID-19 activity.

Preparing for an Omicron Variant Surge

Omicron BA.4 and BA.5 variants are spreading and could be the source of a fall outbreak. Moderna is ready, with bivalent booster shots that show superior antibody response against omicron variants. In the fall of 2022, the demand for such boosters could increase sharply depending on the severity of the next wave.

With new regulations allowing young people – Health Canada has given the green light to vaccinate people aged 6 to 11 – to get boosters, the next wave could propel COVID-19 vaccine sales figures to a rate higher than expected.

Indeed, Moderna remains optimistic about demand for COVID-19 vaccines, and it can still be cautious in sticking to its initial full-year sales forecast of $21 billion.

Although more people are ready to receive the vaccine in the fall and winter of 2022, other COVID-19 vaccine makers may start taking part. Vaccine manufacturer Novavax (NVAX) is an intriguing rival that could surprise on the upside, with the bar now lowered following the company’s 50% discount to its original revenue forecast. Additionally, Pfizer is preparing for the next seasonal surge of COVID-19, with omicron-friendly deliveries coming in October.

Is MRNA stock a good buy? Analysts weigh

As far as Wall Street is concerned, MRNA stocks are in the form of a moderate buy. Out of 10 analyst ratings, there are four buys, five holds and one sell. Moderna’s average price target is $217.89, implying an upside potential of 27.3%. Analyst price targets range from a low of $74.00 per share to a high of $506.00 per share.

Conclusion: there is value for long-term investors

Moderna stock appears to be stabilizing, with a recent 47% rise from its low in June. Although COVID-19 continues to be a deciding factor for the stock, I believe it is attractive for long-term investors to look to the company’s innovative mRNA pipeline. It’s full of potential and could kick off long before COVID-19 activity sees sales drop to zero.

Given the nature of this pandemic, I don’t think COVID-19 activity will ever drop to zero. The world may have to live with the disease, with people having to roll up their sleeves every fall.

Disclosure

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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