Moderna (MRNA) is on everyone’s lips because of the COVID-19 pandemic. The past year has seen the company scale up its production of the much-awaited COVID-19 shots, capitalizing on the benefits of one the largest vaccination drives in the world’s history.
However, after COVID-19 cases started declining around the world, Moderna stock faced turbulence and has lost a considerable amount since September 2021. However, the Omicron variant is expected to accelerate the pace of booster shots across nations and Moderna’s booster shots are considered an optimal choice, even for those who have previously taken up Pfizer’s vaccine. We’re bearish on the stock.
Moderna is a U.S.-based pharmaceutical and biotechnology company that focuses on RNA therapeutics, primarily mRNA vaccines for treating several infectious diseases, immuno-oncology, rare diseases, cardiovascular diseases, as well as auto-immune diseases.
As of now, the company’s only commercially viable product is the Moderna COVID-19 vaccine, and the company has also been working on several other projects like the Epstein-Barr virus vaccine.
Last year, Moderna shipped more than 800 million doses of its COVID-19 vaccine to more than 60 countries around the world, and almost tripled its cash position. Due to this enhanced liquidity, the company is now well positioned to address the present COVID-19 variant of concern, and Moderna’s management is also quite confident for that quest.
Moreover, the fact that the Moderna booster can generate about a 37-fold increase in virus-blocking antibodies also assures that the company will be successful in its mission.
Gena Wang from Barclays has also maintained her position on the Moderna stock. She had however lowered the price target on the company to $404 from $463, and kept an Overweight rating on the company’s shares a few months back as Moderna had missed third-quarter estimates and had lowered its 2021 guidance of vaccine doses and sales.
Emergence of Omicron
The rising number of Omicron cases have started shaking the world in fear once again. In fact, daily COVID-19 cases in the U.S. alone have crossed their all-time highs. Such an increase in the cases once again has raised the urgency of booster doses of the vaccine as only 30% of the U.S. population has received boosters as of yet.
Moderna’s booster dose is found to be quite effective against this new strain of the virus and thus the rising number of cases of this Omicron stain is expected to drive the demand for the company’s COVID-19 vaccine sharply these days.
Besides, only about 60% of the world population has received two or more doses of the COVID-19 vaccine, and the demand for booster doses is still considerably high.
Stronger Financials
Moderna had major gains over the past two years. Since the rolling out of the COVID-19 vaccines, the company has reported billions of dollars in revenue and profits every quarter.
In the third quarter of 2021, the company earned $7.70 per share on sales of $4.97 billion. That included $4.81 billion representing the amount received from the sale of COVID vaccines.
Besides, on comparing its year-over-year performance it can be found that there has been a massive improvement in the company’s financials. Its revenue for the third quarter of 2020 was reported at only $157 million.
Similarly, the loss of $233 million for the same period also narrowed down, and in the third quarter of 2021 Moderna witnessed a net profit of $3.33 billion instead.
Moderna earns a Moderate Buy consensus rating from TipRanks, due to six Buys, eight Holds, and one Sell assigned over the past three months.
The average Moderna price target of $313.58 suggests 95.9% upside potential.
Future Concerns
It is kind of difficult to predict the long-term future performance of Moderna, and there are some possibilities that its sales might even decline in the coming times.
COVID-19 treatments have improved significantly since the U.S. FDA recently showed greenlight to the antiviral drugs from Pfizer and Merck that promise to make the disease easily treatable from the homes.
Once people start feeling that COVID-19 is easily treatable, they might get reluctant to take Moderna’s booster doses in the long run, thereby hurting the company’s revenues.
At present, the COVID-19 vaccine is the only commercial product of the company, and there is no such guarantee that its mRNA technology will work as well in other areas such as oncology and rare diseases as it did in the case of COVID-19.
All biotech companies come with certain levels of risks, and so does Moderna.
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