If you had to pick an all-encompassing Covid-era success story, Moderna (MRNA) would be high on anyone’s list. An unknown company outside industrial circles before the start of the pandemic, the biotech is now a household name after its Covid-19 vaccine mRNA-127 has been approved for use in many regions around the world.
Hand in hand with real success has been a generous reward from the market. After the huge stock gains of 2020, the stock is up 200% year-to-date. The latest surge came after Wall Street’s ultimate hallmark.
Starting July 21, the company will join the exclusive list of companies that make up the S&P 500 – the stock market index. The news sent stocks to a new all-time high.
While the latest spike in stock price is undoubtedly great for investors, Michael Yee notes that Moderna’s valuation has crossed the $100 billion mark and with uncertainty about the booster tail, the high figure is likely prices in any other possible treatments in the pipeline.
Looking at the Q2 numbers, Yee predicts a “light” beat. Moderna led for sales of 200-250 million doses of mRNA-1273 in the quarter. Yee’s forecast is in the middle of the guide – at ~225 million, and will generate $5 billion, higher than the consensus estimate of ~$4.5 billion. Taking into account the US exercise of the option on 200 million doses and the delivery of 110 million in the fourth quarter, the analyst thinks Moderna will likely raise its 2021 expectation “again” from $19.2 billion to $19.2 billion. $21.2 billion.
Looking further ahead, Yee does expect “stockpiling” before 2022, but the US has postponed major orders so far. Since vaccines are currently a politically charged topic in the US, Yee thinks this explains the government’s reluctance to discuss the topic, with the top priority being to get everyone vaccinated.
“We think inventories will be built (book big revenue) because it’s a good idea to be ready,” Yee noted, “But the actual jabs could be 30-50% of what they were during the 2021 pandemic period. given many factors (debate on the level of protection needed to fuel public fear in 2022 and fear much less).”
As for other non-covid developments, another potential catalyst for the stock could be the readout of Phase 1 data from the company’s seasonal flu vaccine candidate before the end of the year. Yee thinks these can “look really strong”.
Nevertheless, based on valuation, Yee reiterates a Hold rating on MRNA stocks, along with a price target of $250. This figure implies a ~20% decline from current levels. (To view Yee’s track record, click here)
In general, the Street’s view of Moderna is somewhat of a mystery. The stock has an average buying consensus rating, based on 7 purchases, 4 held and 2 sales. However, the average price target of $206.55 implies that stocks will fall by ~34% in the coming year. It will be interesting to see if analysts make changes to their MRNA models soon. (See MRNA stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are those of the featured analyst only. The content is for informational purposes only. It is very important to do your own analysis before making any investment.