People depended on Moderna (NASDAQ:MRNA) in 2020 and 2021 for COVID-19 vaccines, but the pharma market landscape has changed dramatically since then. Now, Moderna has to demonstrate that it can evolve. Yet, the company’s latest quarterly report offers hope to frustrated shareholders. All in all, I am bullish on MRNA stock and envision a major turnaround story for 2024.
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Moderna is a well-known drug and vaccine manufacturer. The company doesn’t only develop COVID-19 vaccines, of course. In actuality, Moderna’s mRNA technology can be applied to a variety of important medical use cases.
That’s all fine and well, but the market wants confirmation that Moderna is a financially viable business. As it turns out, there’s a fresh round of data to show that Moderna, while out of favor for a while, is a Big Pharma firm on the comeback trail.
Moderna’s Profitable Quarter Takes Investors by Surprise
February 22 was a good day for large-cap stocks generally, mainly because Nvidia (NASDAQ:NVDA) published a blockbuster earnings report. Yet, that’s not the primary reason that MRNA stock flew 13.5% higher and broke above $100 before pulling back slightly.
Rather, the catalyst was Moderna’s financial report for the fourth quarter of Fiscal Year 2023. Moderna stock doesn’t normally move 13.5% in a single day, so clearly, there must have been something special in the company’s press release.
Indeed, there were many special things to take note of. First of all, Moderna generated $2.8 billion in Q4-FY2023 revenue, while the consensus forecast only called for $2.5 billion in revenue.
To be fair and balanced, I must acknowledge that Moderna’s quarterly revenue declined 43% year-over-year, primarily due to a drop-off in COVID-19 vaccine sales. Consequently, Moderna will need to focus on other areas than COVID-19 vaccines, but we’ll get to that topic in a moment.
Turning to the bottom-line results, Moderna posted GAAP-measured net income of $217 million and non-GAAP diluted earnings of $0.55 per share. The unfortunate aspect of this result is that it’s a fall-off compared to the $3.61 per share that Moderna had earned in the year-earlier quarter.
However, when we look at it through a different lens, we can see that Moderna did much better in Q4 FY2024 than the experts had anticipated. Wall Street had braced for Moderna to report a loss of $0.99 per share, so it was a nice surprise when the company actually reported positive earnings of $0.55 per share.
Moderna Moves Past Its “Year of Transition”
Sometimes, when corporate executives want to acknowledge a tough year in a press release, they’ll call it a “year of transition.” Indeed, that’s exactly how Moderna CEO Stéphane Bancel described 2023.
Again, it’s been challenging for Moderna to commercialize COVID-19 vaccines in recent years. The company will continue to sell them, but fortunately, Moderna has other medical treatments in the pipeline.
For now, it looks like Moderna’s most promising proposed drug for 2024 will be mRNA-1345. That’s Moderna’s RSV vaccine, for which the company expects to get regulatory approval “starting in the first half of 2024.”
This could prove to be a substantial revenue generator for Moderna. In anticipation of the approval of mRNA-1345, Moderna’s management “is encouraged by early indications of widespread consumer awareness and established demand in the RSV market.”
In an interview, Bancel reiterated that 2023 was a “year of transition.” That year, Moderna “right-sized” its manufacturing and “took a big write-off.” So, the CEO isn’t afraid to admit that Moderna had some problems.
It’s a new year, and with that, Moderna can develop new treatments but also continue to market its COVID-19 vaccines. Bancel remains confident, assuring, “Now I think we’re off to the races. The objective this year … is to increase vaccination rates.”
That’s easier said than done, but again, Moderna isn’t wholly dependent on its COVID-19 vaccines. For Moderna’s RSV shot, Jefferies analyst Michael Yee predicted “a fairly smooth FDA approval.” In time, we’ll know whether this works out as Moderna’s management undoubtedly hopes it will.
Is Moderna Stock a Buy, According to Analysts?
On TipRanks, MRNA comes in as a Moderate Buy based on seven Buys, five Holds, and one Sell rating assigned by analysts in the past three months. The average Moderna stock price target is $131.38, implying 32.1% upside potential.
If you’re wondering which analyst you should follow if you want to buy and sell MRNA stock, the most profitable analyst covering the stock (on a one-year timeframe) is Hartaj Singh of Oppenheimer, with an average return of 280.18% per rating and a 96% success rate. Click on the image below to learn more.
Conclusion: Should You Consider Moderna Stock?
Even after a large single-day rally, Moderna stock still has plenty of overhead room to run further. It’s mainly a matter of whether Moderna can successfully commercialize its COVID-19 vaccines, RSV shot, and other treatments in the company’s pipeline.
At the very least, Moderna managed to deliver a surprise profit and a handy quarterly earnings beat. That’s commendable, so I’m feeling bullish about MRNA stock and will certainly consider it for a share position.
