What’s Next For Moderna Stock After Nearly A 20% Rise In A Week?

MRNA: Moderna logo
MRNA
Moderna

Moderna (NASDAQ:MRNA) stock rallied 9% yesterday, after it launched phase 2/phase 3 clinical trials for a messenger RNA-based vaccine for skin cancer patients that it is developing with Merck. As per an earlier study, a combination of the vaccine and Merck’s blockbuster Keytruda immunotherapy resulted in a significant improvement in recurrence-free survival time in patients with late-stage melanoma. The vaccine also cut the risk of recurrence or death by 49% in melanoma patients over three years versus Keytruda alone. Although the vaccine is still at a distance from commercialization, the developments are positive for Moderna. It demonstrates the potential of the company’s mRNA technology — which was the basis of the company’s Covid-19 vaccine — in lucrative areas, such as oncology.

Looking at MRNA stock performance over a slightly longer term, it has seen little change, moving slightly from levels of $105 in early January 2021 to around $110 now, vs. an increase of about 35% for the S&P 500 over this roughly three-year period. Overall, the performance of MRNA stock with respect to the index has been quite volatile. Returns for the stock were 143% in 2021, -29% in 2022, and -45% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 24% in 2023 – indicating that MRNA underperformed the S&P in 2022 and 2023.

In fact, consistently beating the S&P 500 — in good times and bad — has been difficult over recent years for individual stocks; for heavyweights in the Health Care sector including LLY, UNH, and JNJ, and even for the megacap stars GOOG, TSLA, and MSFT. In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

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With the pandemic behind us, could MRNA face a similar situation as it did in 2022 and 2023 and underperform the S&P over the next 12 months — or will it see a strong jump? From a valuation perspective, MRNA stock trades at 5.3x revenues, compared to the 4.8x average seen over the last three years. Our Moderna (MRNA) Valuation Ratios Comparison has more details.

Moderna’s revenue plunged 64% y-o-y to $6.8 billion in 2023 due to lower demand for the Covid-19 vaccine. The company expects its sales to fall to around $4 billion in 2024. That said, there are a couple of reasons to consider the stock. Moderna will likely see some level of recurring revenues from its versions of its Covid-19 booster shots, which are likely to continue much like flu shots. The company has seen its market share expand to 48% of the total U.S. Covid-19 vaccine market. Moreover, the recently launched clinical trials show enthusiasm for its skin cancer vaccine. Moderna’s pipeline, which includes over three dozen experimental programs targeted at oncology, rare disease, and infectious diseases, looks promising. Moderna has been focused on reducing its costs, which helped it beat the earnings estimates in Q4, a trend expected to continue in the near term. The company’s sizable cash holdings of over $8 billion could also enable it to make some acquisitions in the biotech space. 

While MRNA stock may have some positives to look forward to, it is helpful to see how Moderna’s peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

Returns Mar 2024
MTD [1]
2024
YTD [1]
2017-24
Total [2]
 MRNA Return 21% 13% 633%
 S&P 500 Return 0% 7% 128%
 Trefis Reinforced Value Portfolio 0% 4% 639%

[1] Returns as of 3/12/2024
[2] Cumulative total returns since the end of 2016

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