At $140, Moderna Stock Is A Solid Value Bet

Moderna stock (NASDAQ: MRNA) has declined by almost 40% thus far in 2022 and currently trades at about $142 per share. The sell-off is driven by a couple of factors. Investors are clearly looking past vaccine stocks as the big initial vaccination drive of the early pandemic is now behind us. The now dominant omicron virus variant results in a lower rate of severe disease and a recent study indicated that booster doses of Covid-19 shots from both Moderna and Pfizer saw efficacy decline in about four months. This is raising concerns regarding the sustainability of vaccine demand. Separately, surging U.S. inflation and the prospect of multiple interest rate hikes also aren’t helping stocks such as Moderna. Moreover, insiders including Moderna’s top executives have been offloading shares and this has also been putting pressure on the stock.

However, we think there is a lot of value in the stock at current levels. The stock remains down by almost 70% from all-time highs seen in 2021 and trades at just 5x 2022 consensus earnings estimates, which appears very cheap for a biotech stock. If we exclude the sizable $15.3 billion in cash and cash equivalents of the company held as of September 2021 from its market cap, the company’s forward P/E multiple reduces to a mere 3.7x.

To be sure, the markets typically assign stocks a very low multiple when they expect sales to decline going forward and this is likely to hold true for Moderna, as vaccine revenues could decline from 2023 onward as Covid likely becomes endemic. That said, Moderna could protect its vaccine business to an extent, via the launch of its combined Covid-19 and flu vaccine, which it expects could be approved by fall 2023. Moderna’s sizable pipeline also might hold promise, as the company is looking to leverage its mRNA technology – which worked very well with Covid-19 – to develop treatments for cancer, cystic fibrosis, and rare diseases. Considering this, we think that the risk to reward trade-off for Moderna looks very attractive at current levels. The next major catalyst for the stock is likely to be Moderna’s Q4 2021 earnings which are due on February 24. We value the stock at about $250 per share which is about 75% ahead of the current market price.

Check out our analysis Moderna Valuation: Expensive or Cheap for more details. See our analysis on Moderna Revenues: How Does MRNA Make Money? for more details on Moderna’s business model and how its revenues are expected to trend.

Below you’ll find our previous coverage of Moderna stock where you can track our view over time.

[1/3/2022] What’s Happening With Moderna Stock?

Moderna stock (NASDAQ: MRNA) had a banner year of sorts in 2021, as the company quickly scaled up production and distribution of its Covid-19 shot. Moderna’s financial performance has also been great, with sales likely to grow over 13x year-over-year to more than $17 billion for 2021, with profits likely crossing the $10 billion mark for the year. Despite the strong recent growth, Moderna stock trades at about $255, or under 10x projected 2022 earnings, compared to the broader biotech sector which trades at over 30x. Does this make Moderna stock a buy at current levels? While Moderna’s multiple appears very reasonable for a highly profitable biotech stock, there is more to the story.

We expect Moderna’s sales to grow by about 18% over 2022, driven by continued strong demand for the company’s Covid-19 vaccine. While over 60% of the U.S. population has received two or more doses of a Covid-19 vaccine, the demand for booster doses is likely to remain a recurring affair, driven by diminishing immunity and the emergence of new variants, such as the omicron strain. In fact, daily Covid-19 cases in the U.S. have surged to all-time highs, averaging around 400,000 over the last week, increasing the urgency to boost immunity as only about 21% of the U.S. population has received a booster dose. Moderna’s booster dose is quite effective against the new virus strain, increasing neutralizing antibody levels against the new omicron strain of the virus by about 37-fold. However, margins are likely to take a hit in 2022, as Moderna faces higher competition, and also as emerging markets account for a growing mix of sales.

Now, it’s probably a little difficult to forecast longer-term growth for Moderna and there is a real possibility that sales could decline from 2023. Treatment options for Covid-19 are getting much better, with the U.S. FDA recently green-lighting anti-viral drugs from Pfizer and Merck, which promise to make the disease easier to treat from home. An easily treatable disease could give people less incentive to take booster doses in the long term, potentially hurting Moderna’s revenues. Moreover, there remains some uncertainty about the extent to which Moderna’s pipeline will bolster its sales in the long run. While the Covid-19 shot worked very well, we probably can’t take for granted that Moderna’s mRNA technology will work as well in other areas such as oncology and rare diseases.

We value Moderna stock at about $280 per share, about 11x projected 2022 earnings. Our price estimate is roughly 10% ahead of the current market price. Check out our analysis Moderna Valuation: Expensive or Cheap for more details. See our analysis on Moderna Revenues: How Does MRNA Make Money? for more details on Moderna’s business model and how its revenues are expected to trend.

Below you’ll find our previous coverage of Moderna stock where you can track our view over time.

See our indicative theme of  Covid-19 Vaccine stocks which includes U.S.-based pharma and biotech companies.

[12/15/2021] Flu Vaccine And Omicron Uncertainty Weighs On Moderna Stock. Time To Buy?

Moderna stock (NASDAQ: MRNA) has seen a fair bit of volatility, declining by over 20% since early December. The sell-off comes amid the spread of the highly infectious omicron variant of the coronavirus. While Moderna hasn’t yet provided information on how effective its vaccine is against omicron, the company’s CEO made a general statement that the existing crop of vaccines could struggle against the new variant. However, Moderna’s rival, Pfizer, said that the third dose of its vaccine (booster) appeared effective at neutralizing the new virus variant, based on preliminary studies. This lack of clarity is likely weighing on Moderna stock, given that the company derives almost all its revenues from just the Covid vaccine product at present. Separately, Moderna also recently published early human trial results from its experimental seasonal flu vaccine and it appears that the shot is raising antibodies levels only about as much as a high-dose vaccine from Sanofi that’s already in the market, with side effects appearing to be worse than existing shots. This has also hurt the stock.

So does the recent decline make Moderna a buy? Moderna stock remains down by about 40% from its highs seen in August, and trades at just about 10x projected 2022 earnings, which is reasonable for a biotech company. However, there is a lack of clarity about what will support Moderna’s sales following the Covid-19 pandemic. The recent outcome from the company’s flu shot should also serve as a reminder that Moderna’s mRNA-based technology, which worked remarkably well against the original Covid-19 strain – might not be able to replicate its success with other diseases. These could be making investors temper their expectations for Moderna’s pipeline, which includes over 20 vaccines and therapeutic candidates.

See our indicative theme of  Covid-19 Vaccine stocks which includes U.S.-based pharma and biotech companies.

[11/29/2021] Is Moderna Stock A Good Bet Against The New Omicron Covid-19 Strain?

Covid-19 vaccine stocks have come back into focus, after a concerning new strain of the novel coronavirus that was first identified in southern Africa has been highlighted as a variant of concern by the World Health Organization. The variant, dubbed Omicron, apparently has many more mutations and is apparently more transmissible than the Delta variant of the virus, which is currently the dominant strain worldwide. The strain could also pose a greater reinfection risk. While the broader markets saw a big sell-off, with the S&P 500 declining 2.3% on Friday, Moderna stock (NASDAQ: MRNA) rallied by almost 20%, rising to levels of around $330 per share.

There’s good reason for Moderna investors to be optimistic. Scientists have indicated that vaccines will most likely protect against Omicron, although further studies will be needed to determine just how effective the shots are. The threat of the new variant could make some people who were hesitant to get vaccinated finally take the shot. Moreover, with booster doses now approved for all U.S. adults, more people could go in for their third jab to protect themselves from the new variant. Now even in the unfortunate event that the current crop of Covid-19 vaccines is not as effective against the Omicron variant, mRNA-based vaccines, such as Moderna’s, could be adapted to fight new variants much more quickly than other vaccines.

Now, is MRNA stock poised to rise further in the near term? Based on our machine learning analysis of trends in the stock price over the last three years, there is a solid 65% chance of a rise in MRNA stock over the next month (twenty-one trading days). See our analysis on Moderna’s Stock Chance Of Rise for more details.

[11/22/2021] Covid Cases Are Rising Again. Buy Moderna Stock?

Moderna stock (NASDAQ: MRNA) rallied by about 12% over the last week (five trading days) outperforming the S&P 500 which remained roughly flat over the same period. The recent gains come as the U.S. authorized booster vaccine shots for all adults, likely implying that Moderna’s Covid-19 shot can be administered to people six months after their last dose, regardless of which vaccine shot they had previously received. This development could boost the adressable market for Moderna’s vaccine. Moreover, Covid-19 cases are on the rise again, with regions including Europe and Russia battling new waves of infections. Cases in the U.S. have also trended marginally higher over the last week and there are concerns that there could be a winter surge as millions of Americans travel through the holidays. This is also likely helping vaccine stocks.

Now, is MRNA stock poised to rise further in the near-term? Based on our machine learning analysis of trends in the stock price over the last three years, there is only a 42% chance of a rise in MRNA stock over the next month (twenty-one trading days). See our analysis on Moderna’s Stock Chance Of Rise for more details.

Five Days: MRNA 12%, vs. S&P500 0.3%; Outperformed market

(18% event probability)

• Moderna’s stock rose 12% over a five day trading period ending 11/19/2021, compared to the broader market (S&P500) which rose by 0.3%
• A change of 12% or more over five trading days has a 18% event probability, which has occurred 133 times out of 739 in the last three years.

Ten Days: MRNA 7.8%, vs. S&P500 -0.01%; Outperformed market

(39% event probability)

• Moderna’s stock rose 7.8% over the last ten trading days (two weeks), compared to the broader market (S&P500) which remained roughly flat.
• A change of 7.8% or more over ten trading days has a  39% event probability, which has occurred 286 times out of 734 in the last three years.

See our indicative theme of  Covid-19 Vaccine stocks which includes U.S.-based pharma and biotech companies.

Twenty-One Days: MRNA -19%, vs. S&P500 3.5%; Underperformed market

(9% event probability)

• Moderna’s stock declined -19% over the last twenty-one trading days (about one month), compared to the broader market (S&P500) which rose 3.5%.
• A change of -19% or more over twenty-one trading days has an 9% event probability, which has occurred 62 times out of 723 in the last three years.

[11/8/2021] Down 50% From Its Highs, Moderna Stock Looks Like Good Value

Moderna stock (NASDAQ: MRNA) declined by about 30% over the last week (five trading days) following the company’s weaker than expected Q3 2021 results. While Moderna’s revenue for Q3 grew by almost 13% sequentially to about $4.97 billion, they missed consensus estimates by almost 20%. EPS also fell short, coming in at $7.70. The company also lowered its forecast for vaccine sales this year from around $20 billion previously to a range of between $15 billion to $18 billion. Moderna has attributed the decline to some vaccine deliveries being shifted to early 2022 and an increasing focus on low-income countries, where average pricing is likely to be lower. Moreover, Moderna stock also appears to be weighed down by the fact that rival Pfizer is gaining more traction in the vaccine market, with the company reporting vaccine sales of around $13 billion for Q3, about 20% ahead of consensus.

So is Moderna stock worth a look at current levels? We think it is. The stock also remains down by almost 50% from its August highs, presently trading at about $237, under 10x consensus 2021 earnings. While the markets are obviously pricing in a long-term decline in vaccine revenues, given the improving vaccination rates and the potential availability of improving Covid-19 treatment options, the near-term outlook remains positive. In fact, Moderna says that it expects that its 2022 revenues could be between $17 billion and $22 billion, whereas the market was actually projecting flat to negative growth. Moderna also has other opportunities beyond its current Covid-19 shot, including new variants of Covid-19 vaccines, vaccines for infectious diseases, and drugs targeting cancer and rare disease. The risks for these developments are also a bit lower, given that the company has proven the efficacy of its mRNA technology platform with the Covid-19 vaccine. The company also holds plenty of cash (over $15 billion as of Q3) to execute on the pipeline.

See our indicative theme of  Covid-19 Vaccine stocks which includes U.S.-based pharma and biotech companies.

[10/18/2021] Moderna Stock Rose 6% Last Week. What’s Next?

Moderna stock (NASDAQ: MRNA) gained almost 6% over the last week (five trading days) outperforming the broader S&P 500 which was up about 2% over the same period. The recent gains come amid some upgrades on the stock by brokerage analysts and also by the U.S. FDA vaccines advisory committee’s unanimous vote in support of authorizing a third, smaller booster dose of Moderna’s Covid-19 vaccine for people over the age of 65 and above, and for all adults with a high risk of severe disease. However, the stock remains down by almost 26% over the last month (21 trading days) following positive data from Merck on its Covid-19 treatment drug and reports that the FDA would delay a decision on authorizing the Covid-19 shot for adolescents as it assesses whether the shot may lead to a heightened risk of a rare inflammatory heart condition.

Now, is MRNA stock poised to grow? Based on our machine learning analysis of trends in the stock price over the last three years, there is a strong chance of a rise in MRNA stock over the next month (twenty-one trading days). See our analysis on Moderna’s Stock Chance Of Rise for more details.

Five Days: MRNA 6.3%, vs. S&P500 1.8%; Outperformed market

(35% event probability)

• Moderna’s stock rose 6.3% over a five day trading period ending 10/15/2021, compared to the broader market (S&P500) which rose by 1.8%
• A change of 6.3% or more over five trading days has a 35% event probability, which has occurred 252 times out of 714 in the last three years.

Ten Days: MRNA -4.9%, vs. S&P500 2.7%; Underperformed market

(31% event probability)

• Moderna’s stock declined -4.9% over the last ten trading days (two weeks), compared to the broader market (S&P500) which rose by 2.7%
• A change of -4.9% or more over ten trading days has a  31% event probability, which has occurred 223 times out of 709 in the last three years.

Twenty-One Days: MRNA -26%, vs. S&P500 -0.3%; Underperformed market

(4% event probability)

• Moderna’s stock declined -26% over the last twenty-one trading days (about one month), compared to the broader market (S&P500) which declined by -0.3%
• A change of -26% or more over twenty-one trading days has an 4% event probability, which has occurred 28 times out of 698 in the last three years.

[9/12/2021] Moderna’s R&D Day Indicates Covid-19 Will Remain The Biggest Driver Of The Stock

Moderna stock (NASDAQ: MRNA) rallied by about 8% in Thursday’s trading and remains up by over 15% over the last week (last five trading days). This compares to the S&P 500 which remains down 1% over the last week. The rally follows the company’s virtual R&D day event, during which it provided updates on its pipeline.

The highlight of the event continued to be the Covid-19 business, with the company developing shots to tackle Covid-19 variants of concern and a next-generation vaccine that could be easier to store and distribute. Notably, Moderna announced a new vaccine development dubbed mRNA-1073 that will combine a flu vaccine booster with a Covid booster into a single shot. Covid-19 is proving hard to contain due to new variants and likely diminishing immunity, and periodic booster vaccinations could become the norm. By combining flu and Covid-19 shots, people can take an annual shot that protects against the variant of concern for Covid-19 as well as the seasonal flu strain. This may prove a meaningful driver of recurring revenues for Moderna, if successful.

There’s also more optimism surrounding the rest of Moderna’s pipeline. The success of the company’s Covid-19 vaccine helps to validate the safety and efficacy of Moderna’s mRNA technology, to an extent, and likely reduces the risk surrounding the rest of Moderna’s sizable pipeline which has developments ranging from vaccines for infectious diseases to drugs targeting cancer and rare disease. The company has a total of 34 development candidates, 22 of which are in ongoing clinical studies. Moderna now also has the wherewithal to execute on its pipeline. Moderna said that it had a cash position to the tune of about $15 billion as of August 31, and this is only likely to swell, as the sales of its wildly profitable Covid-19 shot – which has gross margins estimated to be in excess of 80% – continue.

See our indicative theme of  Covid-19 Vaccine stocks which includes U.S.-based pharma and biotech companies.

[8/16/2021] Moderna Stock: What Are The Risks?

Moderna stock (NASDAQ: MRNA) is up by about 2.5x year-to-date, trading at levels of about $390 per share as of Friday. The rally comes on the back of Moderna’s recent inclusion into the S&P 500 index and the emergence of new virus variants which are making a strong case for booster doses of Covid-19 shots, potentially turning the vaccine, which was expected to be a one-off product for Moderna, into a recurring revenue stream. However, Moderna’s market cap now stands at about $160 billion,  making it the most valuable U.S. biotech, and the risks appear to be considerable for investors looking to enter at current levels.

Moderna trades at about 16x consensus 2021 earnings. That may appear a very reasonable multiple for a Biotech company poised to post big growth this year, but investors need to take a longer-term view to value the stock. Even if Covid-19 vaccine sales will continue for the foreseeable future, it’s likely that sales will show a declining trend versus 2021, as vaccination rates improve globally and as competition in the vaccine market mounts. For example, Novavax has a cheap and highly effective shot, that’s likely to be approved for use later this year and it is possible that there are going to be more vaccines available in the coming years if Covid-19 becomes endemic. The consensus estimate for Moderna’s 2022 revenues points to a revenue decline of about -16%. If vaccine sales show signs of slowing, which we eventually believe they will, investors are likely to re-rate the stock lower.

Although Moderna is generating plenty of cash to bolster its pipeline, which currently includes nine vaccines and 13 therapeutic candidates in areas including immuno-oncology and rare diseases, it’s unlikely that revenue from any of Moderna’s pipeline candidates will be anywhere near as large and profitable as its Covid-19 shot. Moreover, it remains to be seen just how effective Moderna’s mRNA technology is outside of infectious diseases such as Covid-19. Investors should have more color on Moderna’s future prospects on September 9, when the company is likely to review the progress of its research pipeline.

A large part of the rise in Moderna stock in recent weeks has come from the momentum following the company’s inclusion into the S&P 500 in mid-July. This likely led to index funds tracking the index, as well as funds benchmarked to the index, buying into Moderna stock. Moreover, the high visibility and surging stock price have meant that Moderna stock has emerged as a favorite among retail traders. This could make the stock volatile in the near term if momentum traders pull back. We saw signs of this last week as the stock lost almost 20% of its value in just four trading sessions.

See our indicative theme of  Covid-19 Vaccine stocks which includes U.S.-based pharma and biotech companies.

[8/10/21] What Drove Moderna Stock From $100 To Near $500?

Moderna stock (NASDAQ: MRNA) has rallied from around $104 per share at the end of 2020, to about $485 as of Monday, an increase of over 4.5x. This compares to the S&P 500 which is up by just about 20% over the same period.

The first leg of the rally that happened through the first half of this year was relatively steady and came as Moderna scaled-up production and distribution of its much sought after Covid-19 vaccine, signed new supply agreements, and reported robust financials on its shot (net margins stood at an incredible 64% for the first half of 2021).

However, the big surge has come since mid-June, 2021, as the stock rallied from around $200 to levels of close to $500 currently. There are a couple of factors driving the recent surge.

Firstly, there is an increasing realization that Covid-19 will be more difficult to contain than initially thought, even in countries with high vaccination rates, due to the emergence of new virus variants. For example, the seven-day average of Covid-19 cases in the U.S. has risen from around 22k in early July to over 124k currently due to the highly infectious Delta variant of the virus. Cases in highly-inoculated Israel are also up by almost 10x over the last month. Research is also showing that protection provided by Covid-19 vaccines begins to wane after several months. These developments are making a real case for booster vaccinations and Moderna is perfectly poised to cater to this market with its mRNA technology which can be more quickly adapted to fight new variants. This could mean that Moderna’s highly lucrative Covid-19 vaccine revenues are likely to continue for the foreseeable future (rather than just being a one-off pandemic product), likely causing investors to re-rate the stock higher.

Moreover, Moderna stock was included in the S&P 500 in July and this drove strong demand for the stock from index funds that track the S&P 500 and possibly from managed funds that are benchmarked to the S&P 500. This momentum has also pushed the stock up considerably in recent weeks.

So is there more room for Moderna stock to rally? It’s not clear. The stock now trades at about 20x projected 2021 earnings. That’s not a very large number in the context of a hot biotech stock posting big growth this year. However, it remains to be seen whether the company will be able to sustain growth and margins going forward, as vaccination rates improve globally and as competition in the vaccine market mounts, with the likes of Novavax, which has a cheap and highly effective shot, likely to hit the market later this year.

See our indicative theme of  Covid-19 Vaccine stocks which includes U.S.-based pharma and biotech companies.

[7/19/2021] Moderna Stock: Next Stop $400?

Moderna stock (NASDAQ: MRNA) rallied by more than 20% over the last week, significantly outperforming the S&P 500 which was down by about 1%. The recent rally comes as Moderna is set to be included in the S&P 500 index starting from July 21. Moderna stock has already risen by more than 2.5x year to date, as demand for Covid-19 shots keeps growing (see updates below). The stock closed at about $286 on Friday, and levels of $300 are looking easily reachable, as the S&P inclusion is likely to drive strong near-term demand for Moderna stock from not just index funds that track the S&P 500, but possibly from managed funds that are benchmarked to the S&P 500. This could continue to drive the stock up in the near term. Now is a $400 stock price achievable for Moderna stock in the next year or so?  It’s looking like a real possibility for a couple of reasons.

Moderna stock currently trades at a mere 12x 2021 consensus earnings. The conservative multiple is largely due to the fact that investors expect sales of the Covid vaccine – Moderna’s only revenue-generating product – to drop from 2022 onward. Consensus estimates point to a 15% decline in sales next year. That said, Covid-19 has proved more difficult to contain than initially thought, due to the emergence of new Covid variants. Despite high levels of vaccinations, countries such as the U.K and Israel are seeing a sharp increase in Covid-19 cases. This is making a real case for booster vaccinations with new formulations targeting the variants. Moderna is perfectly poised to cater to the booster market with its mRNA technology which can be more quickly adapted to fight new variants. Pricing for booster shots shouldn’t be an issue, as governments are likely willing to pay up to limit the strain on economies and healthcare infrastructure. This should mean that Moderna’s Covid-19 vaccine sales could hold up stronger than we realize over a multi-year period.

More importantly, Moderna’s vaccine cash cow will give it the ability to fund its research pipelines in the years to come. The company is developing nine vaccines and 13 therapeutic candidates in areas including immuno-oncology and rare diseases. Four of the company’s developments, including its CMV vaccine and personalized cancer vaccine, are in phase 2 trials. Overall, the strong momentum following the S&P inclusion, continuing prospects for the Covid-19 shot, and upside from Moderna’s pipeline could mean that a rally to $400 isn’t looking like a stretch for Moderna stock.

See our indicative theme of  Covid-19 Vaccine stocks which includes U.S.-based pharma and biotech companies. The theme is up by about 64% year-to-date and by over 16x since the end of 2019.

[6/23/2021] Will The Moderna Rally Continue?

Moderna (NASDAQ: MRNA) has seen its stock rally by 35% over the last month and remains up by almost 11% over the last five trading days alone, as the good news keeps on coming for the Covid-19 vaccine major. Last week, the company said that the U.S. government was buying another 200 million doses of its Covid-19 shot, which will likely be used to vaccinate children or be used as booster shots. This is in addition to the existing order of 300 million doses that the company will likely supply by the end of July. The new deal could be valued at upward of $3 billion, assuming a price of $16.50 per dose, which is the price the U.S. paid for the original vaccine.

Moderna is also looking to scale up its production capacity to as much as 3 billion doses in 2022, up from roughly 1 billion doses in 2021, and recently outlined plans to add two new production lines at its plant in Boston. Although we initially expected the size of the Covid-19 vaccine market to fall off sharply from 2022, growing concerns about new coronavirus variants make it a real possibility that Covid-19 vaccinations will be a recurring affair in the near future. This bodes well for Moderna, which now has ample production capacity and a flexible mRNA technology, which should enable it to quickly adapt its vaccine formulation.

Separately, Germany’s CureVac reported that its highly anticipated messenger RNA vaccine candidate, which leverages a somewhat similar technology as Moderna’s shot, achieved subpar efficacy of just 47% in a late-stage study. Although this is an unfortunate development, investors might be viewing this as positive for Moderna’s vaccine, which would see one less competitor in the near term.

See our indicative theme of  Covid-19 Vaccine stocks which includes U.S.-based pharma and biotech companies. The theme is up by about 50% year-to-date and by over 15x since the end of 2019.

[6/1/2021] Will The Gains In Moderna Stock Continue?

Moderna (NASDAQ: MRNA) stock has rallied by almost 15% over the last week (five trading days), outperforming the S&P 500 which was up by just over 1% over the same period. The rally comes as Moderna’s Covid-19 shot saw strong efficacy results (93% to 100%)  from clinical trials conducted on children aged between 12 to 17. Moderna is expected to submit the results to the U.S. FDA in early June and this could eventually help to widen the addressable market for the company’s vaccine. So will the rally in Moderna stock continue, or is a correction looking more likely from current levels? The Trefis Machine Learning Engine, which analyzes multiple years of historical stock price data, indicates that there is a 53% chance of a rise in MRNA stock over the next month, after rising by about 15% over the last week. See our Moderna Stock Chances of a Rise for more details.

So what’s the longer-term outlook like for Moderna stock? Moderna is expected to see windfall profits over 2021 (likely exceeding $9 billion), with strong earnings likely to follow over 2022 as well, driven by robust demand for its Covid-19 shot. However, with the stock up by about 65% this year, trading at levels of around $185 per share, investors will need to look closely at Moderna’s prospects well beyond 2022. Factors that could drive Moderna’s performance in the longer term include boosters of its Covid shot which could be used to tackle evolving variants of the novel Coronavirus. Moreover, Moderna’s sizable pipeline, which includes another nine vaccines and 13 therapeutics in areas including immuno-oncology and rare diseases, will be key to its post-pandemic prospects. Four of the company’s developments, including its CMV vaccine and personalized cancer vaccine, are in phase 2 trials and any positive data surrounding these developments could also help the stock in the interim.

[2/19/2021] What’s 2022 Looking Like For Moderna?

Moderna (NASDAQ: MRNA) is poised for a solid 2021 as it ramps up sales of its much sought-after Covid-19 vaccine. The company is on track to deliver between 800 million to 1 billion doses of the shot this year and based on its advance purchase agreements, sales for the year could top $19 billion, up from less than $1 billion in 2019. The vaccine is also turning out to be hugely profitable for Moderna, which recorded an incredible 70% net profit margin over Q1 2021. That said, with the worst of the pandemic likely to be behind us this year, what could 2022 have in store for Moderna?

We expect the Covid-19 shot to remain the primary driver of Moderna’s performance in 2022 as well. The global inoculation drive is still in the early stages, with the Bloomberg Vaccine Tracker estimating that vaccine doses have been administered to fully vaccinate just about 10% of the world’s population. This gives Moderna room to scale up further, with the company looking to boost production to as much as 3 billion doses in 2022. That said, 2022 is unlikely to be as profitable for the company, as more doses are likely sold to lower-income markets. For example, the World Health Organization’s Covid-19 Vaccines Global Access program could likely take on as much as 466 million doses from Moderna next year.

Moreover, many experts think that Covid is likely to become endemic with the virus continuing to mutate, potentially making Covid vaccine shots an annual occurrence, much like flu shots. Moderna is working on specific booster shots needed to tackle evolving variants of the virus and this could be a factor driving sales in 2022 and beyond. Governments also aren’t taking any chances, choosing to lock in future vaccine supplies given what’s at stake from a healthcare and economic standpoint, if the virus persists. Countries including Israel and Switzerland have already signed advance purchase agreements (APA) for 2022 and Moderna says that it is having discussions for 2022 supplies with all the countries that signed APAs for 2021.

Moderna has a large development pipeline that includes another nine vaccines and 13 therapeutics in areas including immuno-oncology and rare diseases. Four of the company’s developments, including its CMV vaccine and personalized cancer vaccine, are in the phase 2 trials and any positive data surrounding these developments could also help the stock. With Moderna poised to generate big profits from its Covid-19 shot (as much as $10 billion this year), it will have the resources to bolster its pipeline further in the coming years.

See our indicative theme of  Covid-19 Vaccine stocks which includes U.S.-based pharma and biotech companies. The theme is up by about 25% year-to-date, compared to the S&P 500, which is up by about 10%.

[4/19/2021] Will A Third Vaccine Dose Boost Moderna Stock?

Pfizer (NYSE:PFE) recently said that people who have received both doses of their Covid-19 vaccine would likely require a booster shot and potentially require an annual shot thereafter, much like seasonal flu shots. Moderna (NASDAQ: MRNA), too, has indicated that it would have a booster shot ready by this fall. Now, although there are studies that are underway to determine if additional shots are indeed required to maintain immunity against Covid-19 and fight new variants of the virus, the commentary from two of the largest Covid vaccine players indicates that this is looking like a probable scenario.

Booster and potentially annual doses should be positive for Covid vaccine makers, in general, as they could likely see some level of recurring revenues from what initially appeared like a one-off vaccine. This should be particularly positive for Moderna which counts its Covid-19 shot as its only revenue-generating product at the moment. Moderna is likely to see revenue rise by more than 20x this year to $17 billion driven almost entirely by the Covid shot, with sales projected to decline next year. Moreover, Moderna’s (and Pfizer’s) mRNA vaccine technology allows the development of highly effective vaccines quickly (potentially in a few weeks) and this could help it to quickly adapt its shot based on new variants. However, we think that pricing for booster shots is likely to be lower compared to prices for doses being administered through the pandemic, when governments were willing to pay a premium to end the strain on economies and healthcare infrastructure. For example, Moderna’s shot currently costs as much as $37 per dose, and we think it is quite unlikely that the booster doses will command similar pricing.

See our indicative theme of  Covid-19 Vaccine stocks which includes U.S.-based pharma and biotech companies. The theme is up by about 44% year-to-date.

[4/7/2021] Are Covid Vaccine Stocks Still Worth Investing In?

Covid-19 vaccine stocks have had a solid run, driven by the urgency to end the pandemic and the unprecedented speed at which companies have developed highly effective vaccines. Our theme of Covid-19 Vaccine Stocks – which includes Moderna (NASDAQ: MRNA), Novavax (NASDAQ: NVAX), Johnson & Johnson (NYSE:JNJ), and Pfizer (NYSE:PFE)– is up by 22% year to date and by over 13x since the end of 2019. We’ve now reached the point in the cycle where most major players (except Novavax) are scaling up deliveries of their shots. About 690 million Covid vaccine doses have been administered thus far worldwide, per the Bloomberg Vaccine Tracker. With vaccinations happening at a rate of about 16.3 million doses per day globally and most vaccines requiring two doses, there’s still a long way to go before the global population of close to eight billion people is vaccinated.

So clearly vaccination programs are just getting started based on the larger scheme of things. However, the markets are beginning to look beyond the pandemic. With bond yields rising and the economy continuing to open up, investors have been rotating out of pandemic winners such as vaccine and work-from-home names to more cyclical and value stocks. For example, Moderna and Novavax – both viewed as a direct play on Covid-19 vaccines are down by about 28% and 44% respectively from their February highs. Moreover, the Covid-19 vaccine market is also likely to get increasingly competitive as time goes on, as new players enter the fray and existing players scale up capacity. Pfizer, for instance, says that it could scale up capacity from two billion doses this year to as much as three billion in 2022. Considering this, we think that investors will need to evaluate these companies based on the potential of their future pipelines, rather than just focusing on their Covid vaccines.

[1/29/2021] Novavax’s Vaccine Could Be A Game Changer

Novavax (NASDAQ: NVAX) has said that its Covid-19 shot is 89.3% effective, based on interim data from its phase 3 clinical trials conducted in the U.K.  The company expects to file for emergency authorization with U.K. regulators in the coming months. While the reported efficacy numbers seem to put the vaccine slightly behind Pfizer (NYSE: PFE) and Moderna (NASDAQ: MRNA), who have rolled out vaccines that are roughly 95% effective, we think the Novavax shot holds more promise for a couple of reasons. Firstly, Novavax’s two-dose shot has shown efficacy against the new strains of the Coronavirus found in the U.K. and South Africa, making it the first company to prove this in clinical trials. So while the 89% figure looks slightly lower than Pfizer and Moderna’s reported results, the Novavax shot is at 95.6% effectiveness against the original virus — right in line with the two competitors. The shot should also be easier to distribute, considering that it doesn’t need to be stored in super-cold temperatures, unlike Pfizer’s mRNA-based vaccine. Novavax’s vaccine is also likely to be more reasonably priced – a deal with the U.S. government saw each dose priced at about $16, versus as much as $37 per dose for Moderna’s vaccine. Crucially, the company has also lined up a lot of production capacity, collaborating with the world’s largest vaccine producer Serum Institute of India with plans to produce its vaccine at a rate of 2 billion doses a year starting from mid-2021. See our updates below for more details on the Novavax shot.

[1/27/2021] Novavax Updates

Novavax’s (NASDAQ: NVAX) experimental Covid-19 shot is being closely watched, given some promising early-stage data and the company’s move to line up significant manufacturing capacity. Here’s a quick overview of what has been happening with Novavax stock in recent weeks. Firstly, the company is looking to raise as much as $500 million in equity, in a move that should improve its liquidity position and help fund its R&D spending. This is probably a smart move, as Novavax stock is up almost 15x over the last 12 months, with its market cap standing at about $8 billion. Novavax also has three efficacy/safety studies of its Covid-19 shot underway in the U.K, South Africa, and the U.S., with some initial efficacy data expected to come out in a few weeks. The company could be looking to hedge its position before the data readout. Separately, interest in the vaccine appears to be increasing. Novavax has finalized an agreement with the Canadian government to supply as many as 76 million doses of its Covid-19 vaccine and there have also been reports that South Korea is in talks to buy around 40 million doses of the Novavax vaccine. Novavax stock has fared relatively well year to date, rising by about 12% since the beginning of January. See our indicative theme of  Covid-19 Vaccine stocks which includes U.S.-listed pharma and biotech companies. The theme is up about 4x over the last 2 years.

[1/4/2021] Why Did Novavax Stock Decline 20% In December? 

Vaccine specialist Novavax (NASDAQ: NVAX) – which is seen as a key player in the Covid-19 vaccine space – saw its stock price decline by about 20% over December. Here are a few possible reasons for the decline.

Covid-19 vaccines by Pfizer (NYSE: PFE) and Moderna (NASDAQ: MRNA) received emergency approval from the U.S. FDA in December and inoculation drives have already begun in the U.K and the U.S. with these countries looking to get their citizens vaccinated as quickly as possible. For instance, the U.S. says that every American who wants a Covid-19 vaccine should have one by June. This likely means that demand for the Novavax vaccine – which is only likely to be available, subject to approval, in Q1 2021 or later – will be somewhat limited in the country. While Novavax has supply agreements with the U.S. and Australia, the company might not see much upside in developed markets.

Novavax announced that it was commencing phase 3 clinical trials for its novel coronavirus vaccine in the U.S. and Mexico last week. While this is good news, considering that Novavax saw multiple delays in starting late-stage U.S. studies amid manufacturing challenges, there are concerns whether the company will be able to meet its target of signing up 30k volunteers when there are two highly effective vaccines already available in the market. For example, prospective volunteers might be concerned that they are given a placebo or that Novavax’s candidate could be less protective or even if their involvement in the trial could impact their ability to take another vaccine.

See our indicative theme on Covid-19 Vaccine stocks for more details on the performance of key U.S.-based companies working on  Covid-19 vaccines.

[Updated 12/23/2020] What Are The Risks For Novavax?

Vaccine specialist Novavax (NASDAQ: NVAX) has seen its stock price soar by roughly 25x year to date. While part of the gains were driven by encouraging results for phase 3 trials of the company’s NanoFlu flu vaccine back in March, a bulk of the price appreciation is due to the company’s development of a Covid-19 vaccine candidate. While we discussed some of the merits of the Novavax vaccine in our previous update (see below), in this note, we take a look at some of the key risks that it could face.

While Novavax entered the Covid vaccine race in the Spring, along with Moderna and Pfizer/BioNTech who have now started rolling out their vaccines, the company has faced delays in its timeline. The first readouts from its phase 3 trials are expected around Q1 2021 – likely one quarter behind the front runners. Only after these results are available will the company be able to file for emergency approval and rollout its vaccine. While this may not be a big deal considering that there’s enough room for multiple Covid vaccines, Novavax might miss out on relatively more lucrative orders from developed markets. For instance, the U.S. is now expected to increase its order for Pfizer’s vaccine to another 100 million doses.

Margins for the vaccine could also be a concern. Novavax’s vaccine is based on subunits – essentially using a fragment of the virus – and the manufacturing process is apparently more complex compared to the method used in messenger RNA vaccines including Moderna’s.  This could potentially make the Novavax vaccine more expensive to manufacture. Based on a supply agreement with the U.S. government, the Novavax vaccine will be priced at about $16 per dose, below the $19.50 for Pfizer’s vaccine and as much as $37 per dose for Moderna’s. The potentially more complex manufacturing process and lower prices could mean that margins might be lower.

[Updated 12/2/2020] Does Novavax Covid Vaccine Still Matter?

Novavax (NASDAQ: NVAX) stock saw some volatility after the company said that it had rescheduled its Phase-3 clinical trial in the US, indicating that it could begin in the coming weeks, instead of starting in November. This marks the second time that the company has delayed its U.S. trials, amid some challenges with scaling up production. While the company currently has late-stage trials underway in the U.K, with a readout expected in Q1 2021, Novavax significantly trails frontrunners Pfizer and Moderna who have shown extremely high efficacy rates of roughly 95% and have already applied for emergency approval with the U.S. FDA. Considering that the Novavax vaccine could be at least one quarter behind the frontrunners, will there be a place in the market for the Novavax vaccine even if it proves safe and effective and wins regulatory approval? We believe the answer is yes, for multiple reasons.

While the Novavax vaccine might arrive later than expected, it still holds promise. Firstly, based on data from early trials there are indicators that it might be highly effective. For example, the antibody responses for the Novavax vaccine were meaningfully stronger than other vaccines that have been reported at that time, per data from its Australian trials that were available in August. The vaccine should also be easier to distribute, as it only needs to be stored at refrigerated temperatures, unlike Pfizer’s vaccine which needs to be stored at ultra-cold temperatures.  Novavax’s vaccine might also be more reasonably priced. Based on a supply deal with the U.S. government, the vaccine’s price is estimated to be about $16 per dose, compared to as much as $37 per dose for Moderna’s vaccine and $19.50 for Pfizer’s. If all goes well, Novavax could also scale up production fairly quickly. In September Novavax reached an agreement with the Serum Institute of India, one of the largest vaccine manufacturers in the world, boosting the company’s capacity to as much as 2 billion doses a year starting from mid-2021.

Novavax’s vaccine could also emerge popular in low and middle-income markets. While the Oxford-AstraZeneca’s vaccine – which is likely to be priced at a few dollars per dose – is seen as key to fighting the pandemic in emerging markets, it now faces questions regarding the way phase 3 trials were handled, potentially resulting in delays and apprehension among governments. This could make the Novavax vaccine – which can be produced at scale and easily distributed – popular if the pricing is suitably adjusted.

[Updated 11/4/2020] Covid-19 Vaccine stocks

Our indicative theme of Covid-19 Vaccine stocks – which includes a diverse set of U.S.-based pharma and biotech companies developing Covid vaccines – is up by about 560% year-to-date, on an equally weighted basis, compared to the S&P 500 which has gained just about 4% over the same period. While most vaccine stocks declined last week, amid a broader sell-off in the markets, they are likely to come back into the spotlight as efficacy data from late-stage trials is expected from frontrunners Pfizer (NYSE: PFE) and Moderna (NASDAQ: MRNA) in the coming weeks. Below is a bit more on the companies in our theme of Coronavirus Vaccine stocks and their relative performance.

Novavax (NVAX), a vaccine development company, began late-stage trials of its Covid vaccine in the U.K in September, and large-scale phase 3 trials are due to begin in the U.S. and Mexico this month. While the company doesn’t have any other products on the market yet, its flu vaccine NanoFlu could be ready for potential FDA approval. The company has received about $1.6 billion in funding from the Federal government. The stock has soared 2,000% year-to-date.

NVAX

Moderna (MRNA) , a clinical-stage biotech company, is carrying out phase 3 trials of its Covid-19 vaccine, completing enrollment of 30,000 participants. The company is likely to have data on whether its vaccine works or not by this month, and has noted that it would seek emergency approval from the FDA if the vaccine is at least 70% effective. The stock is up 253% this year.

Johnson & Johnson (JNJ): Unlike most other vaccine candidates, which are likely to require two shots, J&J is targeting a single-dose vaccine. While the company had to pause trials in mid-October after an illness was reported in a volunteer, the company is now preparing to resume trials.  The stock is down by -5.1% this year.

Pfizer (PFE) is working with German partner BioNTech on a Covid-19 vaccine. The company is likely to have efficacy data from late-stage trials available shortly. The company could supply about 40 million doses in the United States in 2020 if the data is positive and regulators approve the vaccine. The stock is down by about -7.6% this year.

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since the end of 2016.

[1] Month-to-date and year-to-date as of 2/15/2022
[2] Cumulative total returns since the end of 2016

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