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Moderna Is Undervalued and Has Billions to Reinvest

Moderna (MRNA) is the technology platform company best known for making one of the three COVID-19 vaccines currently available in the United States.

It has built an outstanding new technology that will be able to quickly offer new types of medicines to not only the coronaviruses that cause the common cold but flu and RSV as well.

After listening to Stephen Hoge, the president of Moderna, speak at the Piper Sandler virtual healthcare conference, I am confident that the sky is the limit for this company. I am very bullish on this stock at its current price.  

The company has a very logical stepwise project plan. It involves including flu antigens with COVID-19 boosters soon and then start adding RSV antigens as well to create a pan-respiratory vaccine that will protect at-risk populations (the young, the old, and others who are deemed “at-risk”) from all types of respiratory viruses in the short term. 

At the same time, Moderna now has $8.9 billion sitting in the bank that can be reinvested back into its pipeline and quickly bring other mRNA vaccines/drugs to market.

Hoge feels that the biggest issue that the company faced was getting their new mRNA technology platform “de-risked” (his word, not mine), and now that has been done. He feels this will make regulatory approval, as well as clinician and patient use of future products, happen much faster than the company had anticipated several years ago.

Hoge said that on top of the respiratory vaccine programs (the 1010 and 1273 programs), there are 34 other programs in Moderna’s pipeline. He also said that the company now has 10 times more resources (money) than it ever had before. He expects to reinvest all of that into its pipeline and increase the number of programs under development very quickly.  

Recent Results and Dividend

Moderna brought in revenues of $11.83 billion over the last twelve months with a net income of $7.06 billion. 

The company has reported third-quarter earnings of $7.70 per share, missing analyst estimates of $8.97 per share by $1.27. It has also reported $17.00 in earnings per share for the first nine months of 2021, missing analyst estimates of $17.36 for that period.

This represents a situation where analysts are trying to estimate how many vaccines Moderna will make and sell during very volatile times. The misses represent buying opportunities for a new but tested technology that could revolutionize how medicines are created and provided to people.   

Moderna does not pay a dividend. 

The company has a solid set of financial statements. Moderna is making money hand over fist and has the current ratio of 1.35 to prove it. Moderna went on to say that the company has begun ten new programs in the last year alone.

When I calculated the stock’s intrinsic value by modeling discounted cash flows, I pegged it at $497.53. 

Wall Street’s Take

Turning to Wall Street, Moderna has a Hold consensus rating, based on six Buys, six Holds, and three Sells assigned in the past three months. The average Moderna price target of $315 implies 40.1% upside potential.

Investor Sentiment

Out of 51 bloggers that have blogged about Moderna, 76% of them are bullish, while the sector average is approximately 69% are bullish on the biotechnology sector in the last three months.  However, TipRanks investor sentiment is very negative and news sentiment is bearish as well.

Conclusion

Based on the intrinsic value of this stock, the Wall Street analyst’s estimates, and the blogger estimates covering Moderna, I am bullish on this stock. Moderna has created a technology platform that may bring personalized medicine to patients one day. I am excited to see where the company and the stock price go from where it is today.

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Disclosure: At the time of publication, Tim O’Rourke did not have a position in securities mentioned in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates  Read full disclaimer >