Moderna's (NASDAQ: MRNA) COVID-19 vaccine has created a multibillion-dollar revenue stream for the company, but is the massive $130 billion valuation of the business justified? In this Fool Live video clip, recorded on Oct. 4, Fool.com contributors Rachel Warren and Jason Hall discuss whether Moderna could be a smart buy despite its nosebleed-level valuation.
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Rachel Warren: It's funny, because I write about healthcare stocks a lot and I'm a healthcare writer here at the Fool. I just have never been particularly bullish with Moderna. I understand that it has had this massive success with coronavirus vaccine, and I think that's wonderful.
Obviously, shares have skyrocketed as investors have been super-enthused about this stock. For me, I think part of it comes down to personal risk tolerance. I, when I look at some of these different companies, if you look at Pfizer (NYSE: PFE), which is an incredibly established pharmaceutical company with this hugely diversified portfolio of products.
Then I look at Moderna where they have this sort of singular product. I do think the revenue they're getting from the vaccine is going to allow them to really have a lot of ability to grow their pipeline, and I think that could really benefit them in the years ahead. For me, personally, as an investor, that likes to keep my risk area in the medium area, I prefer companies, even though obviously share price depreciation is going to be slower -- I like the fact, one, there's a company that hasn't really diversified portfolio to fall back on.
To me, I think in the near future, there's a lot of runway left for Moderna. I'm still not super-sure about it, its long-term potential, and that might just me being really pessimistic and my preference for larger and more established companies. But I get why investors are excited about the stock. I think that personally I just have preferred more historically seasoned companies.
Jason Hall: Yeah. It's not just valuation. It's partly evaluation. But I've learned enough that just getting too caught up in the valuation is a good way to miss out on a really excellent business, because a lot of times that premium is worth paying. I think where I have pause is I think about Moderna, and you think about another company that gets called a COVID stock is Fulgent Genetics (NASDAQ: FLGT), and there's this idea, well, Moderna's technology so good, they are definitely going to do a ton of other things.
I don't know that that's necessarily going to be the case when you're talking about medicines. I think when you're talking about genetic testing, Fulgent Genetics has a platform, and they showed because they were able to pivot so quickly to develop a really effective low-cost COVID test. I think there's a lot of lines that are being drawn that I think are accurate with Fulgent, but I don't necessarily think that they are the case with Moderna. I want Moderna to prove it a little more. I need to see multiple phase 3 regulatory approvals before I'm really going to buy it. I love the business. I think they're clearly on to something. It's incredibly well run, but I just need a little more evidence.
Jason Hall owns shares of Fulgent Genetics, Inc. Matthew Frankel, CFP has no position in any of the stocks mentioned. Rachel Warren has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Fulgent Genetics, Inc. The Motley Fool recommends Moderna Inc. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
