Should You Pick Moderna Stock At $150 After 25% Gains In A Month?

MRNA: Moderna logo
MRNA
Moderna

The stock price of Moderna (NASDAQ:MRNA) has seen a sharp 27% rise in a month, while its peer – BioNTech (NASDAQ:BNTX) – has seen its stock rise 10% over this period. Moderna has a couple of factors to back its strong run. Firstly, the U.S. FDA recently approved Moderna’s respiratory syncytial virus (RSV) vaccine, making it the company’s second commercial product, after the wide-success of its Covid-19 vaccine. The demand for Covid-19 vaccine has faded, with annual shots nowhere near in comparison to the demand seen in 2021 and 2022. Now, RSV is a common virus, especially with elderly people, and Moderna has secured the approval for people with age of 60 and above. Although there are other players, including GSK and Pfizer with their own RSV vaccines, Moderna appears to have an edge over others, given that it can be stored frozen and comes in a syringe, implying faster and easy administration. It also has no reported Guillain-Barré syndrome (GBS), which is not the case with GSK and Pfizer’s RSV vaccines. [1] Furthermore, the company announced positive data from phase two clinical trials for its experimental vaccine mRNA-4157. Per the findings, patients treated with Moderna and Merck’s experimental vaccine combined with Keytruda lowered cancer recurrence by 49% compared with patients treated with Keytruda alone. These developments have boded well for its stock over the last month or so.

Even if we look at a slightly longer term, MRNA stock has seen strong gains of 50% from levels of $105 in early January 2021 to around $155 now, vs. an increase of about 40% for the S&P 500 over this roughly three-year period. However, the increase in MRNA stock has been far from consistent. 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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Given the current uncertain macroeconomic environment with high oil prices and elevated interest rates, 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? Moderna only had one marketable product till a few days back, and that product has seen a meaningful decline in sales lately. However, with its RSV vaccine approval and positive data from the cancer vaccine, it appears that Moderna will see more revenues going forward. The valuation for Moderna is purely on the basis of its future potential with its new vaccines. That said, the $142 average of analysts price estimate is slightly below the current market price of $155.

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 few reasons to consider the stock. 1. Moderna will likely see some level of recurring revenues from its versions of its Covid-19 booster shots, given that its market share has expanded to 48% of the total U.S. Covid-19 vaccine market. 2. The recent clinical trials show enthusiasm for its skin cancer vaccine. 3. Its RSV vaccine approval will help it garner more revenues going forward, especially with its advantages over some of its peers. 4. Moderna’s pipeline, which includes over three dozen experimental programs targeted at oncology, rare disease, and infectious diseases, looks promising. 5. The company’s sizable cash holdings of over $8 billion could also enable it to make some acquisitions in the biotech space.

Overall, we think Moderna is in a good position to show sales growth from 2025, and we think it may continue to see higher levels over time. Moderna stock will likely react to any positive development around its skin cancer vaccine and the revenue trends for its RSV vaccine going forward.

While MRNA stock appears to have more room for growth, 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 Jun 2024
MTD [1]
2024
YTD [1]
2017-24
Total [2]
 MRNA Return 9% 56% 914%
 S&P 500 Return 1% 12% 138%
 Trefis Reinforced Value Portfolio 1% 5% 648%

[1] Returns as of 6/6/2024
[2] Cumulative total returns since the end of 2016

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Notes:
  1. Moderna’s Press Release, May 31, 2024 []