What’s Happening With Moderna Stock?

The stock price of Moderna (NASDAQ:MRNA) has seen a sharp 48% fall this year. From its lows of around $50, it is expected to see a rebound after posting a solid Q3 beat. The company reported revenue of $1.86 billion and adjusted earnings of $0.03 per share, compared to the consensus estimates of $1.25 billion in sales and a loss of $1.90 per share. The top-line beat was led by its higher than anticipated sales of Covid-19 vaccine, while its recently approved respiratory syncytial virus (RSV) vaccine raked in just $10 million, much lower than expected. The company’s management stated that the vaccine distributors had completed their orders before the regulatory approval came in for Moderna’s RSV vaccine. The surprise earnings beat can be attributed to the company’s cost-cutting initiatives.

MRNA stock has been seen a sharp decline amid its falling sales post pandemic. For perspective, 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 $3.5 billion in 2024. Still, we think that MRNA stock is undervalued at levels of around $50.

Why?

Firstly, while the Covid-19 booster shots will give some recurring revenues, the new RSV vaccine is likely to see increased adoption, amid its advantages over some of the other RSV vaccines. Moderna’s RSV shot 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 the GSK and Pfizer’s RSV vaccines.

Secondly, the recent clinical trials show enthusiasm for its skin cancer vaccine. A combination of the vaccine and Merck’s blockbuster Keytruda immunotherapy resulted in a significant improvement in recurrence-free survival time in patients with phase three or four melanoma – the deadliest form of skin cancer. The vaccine also cut the risk of recurrence or death by 44%, versus Keytruda alone.

Moderna has a solid pipeline of around 45 products in development, and nearly a quarter of them are expected to be commercialized in the next three to four years. The company has undertaken cost-cutting initiatives with a goal to save $1.1 billion in the next three years. This will likely bolster its bottom line. Lastly, the company has cash on hand of $9.2 billion, which could help it make some acquisitions in the biotech space.

Given the demand for Covid-19 vaccine in 2021 and 2022, and then a significant fall in 2023, MRNA stock has had a volatile journey over the recent years. Its annual returns were considerably more volatile than the S&P 500. Returns for the stock were 143% in 2021, -29% in 2022, and -45% in 2023. In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is considerably less volatile. And it 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.

Given the current uncertain macroeconomic environment, 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 recovery? We think Moderna has a lot of positives to look forward to, and it seems undervalued at levels of around $50. Notably, the $91 average of analysts price estimate reflects around 80% upside from here.

While MRNA stock looks undervalued, 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.

[1] Returns as of 11/7/2024
[2] Cumulative total returns since the end of 2016

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