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Moderna Stock: More than a One-Hit-Wonder
Stock Analysis & Ideas

Moderna Stock: More than a One-Hit-Wonder

Spikevax-maker Moderna (MRNA) is one of the many high-multiple names that’s been viciously retreating as a part of the latest tech-focused sell-off.

Moderna’s epic rise that saw shares double up many times over the course of just a few years could not last forever.

Despite the breakthrough that is the Spikevax COVID-19 vaccine, investors are all about “what have you done for me lately?” As COVID-19 booster revenues begin to retreat in 2023 and 2024, the company will need a new revenue driver.

While it’s unlikely to propel shares of MRNA anywhere close to their all-time highs near the $500 per share mark, I do think that the sell-off has been greatly exaggerated.

In any case, I am switching my stance on Moderna stock from bearish to neutral. Why? I don’t think it’s fair to dismiss the company as a value trap yet, even though we should brace ourselves for pain as COVID cases dwindle from here.

Moderna stock may have lost over 70% of its value from peak levels, but the company is still on the cutting edge of innovation, with some very intriguing prospects in its vaccine pipeline.

Moderna stock is the go-to play for those looking to bet on future game-changing treatments for diseases well beyond COVID-19. From cancer to HIV, and most recently, shingles and HSV (the virus that causes herpes), mRNA vaccine technology represents an exciting frontier in the battle against disease.

Beyond COVID-19

What are the odds that Moderna yields the next significant treatment? It’s hard to say, but investors don’t seem convinced that anything coming out of the pipeline will be able to match the ground-breaking success of its COVID-19 vaccine.

So, pending another blockbuster, Moderna stock definitely looks like a value trap with its 8.9 times trailing earnings multiple that may be raising eyebrows among the value crowd.

If the company is a one-hit-wonder, it won’t justify its current $55-billion market cap. That said, we can’t discount the firm’s innovative capabilities. Further, demand for COVID vaccines beyond 2023 may not fall as sharply as is being currently priced in.

COVID-19 Pandemic Isn’t Over

The world has made a remarkable recovery from the COVID-19 pandemic. With the Americas reopening their doors and mask mandates being lifted across select localities, things are starting to feel pretty normal again. It’s an exciting time for those who’ve been spending so much time indoors to avoid contracting the latest variant.

With Omicron cases falling rapidly, the springtime could be the most normal period we’ve had in this pandemic. Many are already looking for COVID-19 to enter an endemic stage. Could it enter it this year? Perhaps, but there’s also a chance that another variant could prevent such a shift from happening.

Currently, the Omicron BA.2 variant of COVID-19 looks like it could cause an outbreak at some point down the road. While it’s likely not worth locking down over, I do think that booster demand could be key to continuing on with the great American economic reopening.

The trend seems to be each variant is more infectious but less deadly. Vaccines likely helped drive down the virulence of such COVID-19 infections further. Moderna’s data showed that its 50-microgram booster improved Omicron-specific antibodies by around 37 fold.

Given COVID-19 is unlikely to be eliminated anytime soon, it’s likely that seasonal COVID-19 boosters could be the new flu shot, especially for the most vulnerable in a population.

Wall Street’s Take

According to TipRanks’ consensus analyst rating, MRNA stock comes in as a Hold. Out of 14 analyst ratings, there are four Buy recommendations, nine Hold recommendations and one Sell recommendation.

The average Moderna price target is $265, implying an upside of 93.5%. Analyst price targets range from a low of $85 per share to a high of $506 per share.

Bottom Line on Moderna Stock

Moderna stock is hard to value, given that current COVID-19 vaccine demand is likely to wane with time. That said, there’s a chance that booster demand won’t drop as quickly if the pandemic doesn’t make a move into an endemic within the next two years.

Could it be that MRNA stock has fallen too far, too fast? It could have. Beyond COVID-19 vaccine revenues, the company has an impressive pipeline of other mRNA vaccines targeting other diseases.

In any case, I find Moderna stock to be less of a value trap than most other investors.

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