What’s Happening With Moderna Stock?

MRNA: Moderna logo

Covid-19 vaccine producer Moderna stock (NASDAQ:MRNA) has rallied by almost 50% over the past month and currently trades at about $175 per share. The recent rally comes amid optimism surrounding demand for booster shots targeting the omicron variant.

In recent weeks,  Covid-19 cases in the U.S. have trended a bit higher, driven by the new Omicron BA.5 subvariant and the proportion of positive PCR tests reported to the government is also rising. Although the severity of Covid cases has come down, with the proportion of hospitalizations below that of previous variants, the government has been pushing for new booster shots this fall, with the FDA indicating that it would not require additional clinical trials for the new omicron boosters. There has been some positive data from Moderna’s end as well. The company said that its bivalent Omicron booster vaccine mRNA-1273.214  appears to work much better against omicron subvariants BA.4 and BA.5 than its current booster mRNA-1273.  Now, although Moderna has yet to receive a new contract with the U.S. government for its boosters this year, rivals Pfizer and BioNTech recently won a $3.2 billion contract for 105 million doses with the U.S. government. As the government typically offers a choice of vaccines, it’s likely that Moderna, too, will eventually secure a deal.

Now, even following the recent rally, Moderna stock still remains down by about 25% year-to-date and by 60% from all-time highs seen in 2021. The stock is valued at just about 6.5x projected 2022 earnings, and roughly 20x projected 2023 earnings, considering that sales and earnings are projected to fall next year. However, if we include Moderna’s sizable (and growing) cash position of around $19 billion as of Q1, the multiple for 2023 falls to under 15x. We think this is a reasonable valuation given the probability of a recurring revenue stream from the Covid-19 boosters and Moderna’s sizable pipeline of other drugs and vaccines. For example, besides the Covid shots, Moderna has a flu booster, a Respiratory Syncytial Virus booster, and a CMV primary series vaccine in late-stage trials currently. We value Moderna stock at about $220 per share which is about 25% 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.

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 Returns Jul 2022
MTD [1]
YTD [1]
Total [2]
 MRNA Return 23% -31% 1048%
 S&P 500 Return 2% -19% 72%
 Trefis Multi-Strategy Portfolio 3% -20% 213%

[1] Month-to-date and year-to-date as of 7/12/2022
[2] Cumulative total returns since the end of 2016

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