Moderna (NASDAQ:MRNA) published a better-than-expected set of Q2 2022 results last week, although its revenue growth rates and margins are taking a hit as the big demand tailwinds seen earlier in the pandemic ease. While Moderna’s revenue grew by about 9% year-over-year to $4.75 billion driven by better average selling prices, net profit margins contracted from almost 64% in Q2 2021 to 46%, as the company took on one-time charges relating to writedowns on unused inventory and unutilized external manufacturing capacity, a clear sign that vaccine uptake is tapering off. While Moderna recently secured a $1.7 billion deal with the U.S.to supply at least 66 million doses of new booster doses targeting the omicron BA.4 and BA.5 strains, this being offset by weaker demand from emerging markets with the company seeing a substantial reduction of expected deliveries to the COVAX alliance. Moderna has also had to delay some deliveries to the European Union as demand from the region cools. Moderna has essentially reiterated its guidance for 2022, indicating that it has advance purchase agreements for its Covid-19 vaccines worth about $21 billion for the year.
While Moderna stock has gained about 16% since the earnings report last Wednesday, it remains down by about 26% year-to-date. At the current market price of $187 per share, the stock is valued at just about 6.5x projected 2022 earnings, and roughly 22x projected 2023 earnings, considering that sales and earnings are projected to fall next year. However, if we include Moderna’s sizable cash position of around $18 billion as of Q2, the multiple for 2023 falls to about 16x. We think this is a reasonable valuation given the probability of some level of recurring revenue stream from Moderna’s Covid-19 boosters and the company’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. The company is also expected to publish key data from its proof-of-concept studies in rare diseases and immuno-oncology later this year. Moderna appears confident about its future prospects as it just announced a $3 billion share buyback program. We value Moderna stock at about $220 per share which is about 17% 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.
|S&P 500 Return||0%||-13%||85%|
|Trefis Multi-Strategy Portfolio||3%||-10%||253%|
 Month-to-date and year-to-date as of 8/8/2022
 Cumulative total returns since the end of 2016
- Procter & Gamble Stock Has Outperformed The S&P 500 Since 2017 End: Here’s Why
- After 10% Drop Last Week, Can Delta Air Lines Stock Bounce?
- Why Harley-Davidson Stock Is Holding Up Despite A Tough Automotive Market
- Is BNY Mellon Stock Stock Fairly Priced?
- What’s Driving Growth For J.B. Hunt Stock?
- Is There More Upside For Humana Stock?