Moderna currently has a PE of 5.4, they made $4.7 billion last quarter (beating estimates of $4 billion), they have $21 billion in advance purchase agreements for Covid vaccines in 2022, they have ~$18 billion in cash to $650 million in debt, they have a current net profit margin of ~52%, they have a highly effective vax that has now been approved by the FDA for children……aaaaaannnnnd they have no other products besides their SPIKEVAX. Murky waters?
Obviously a huge part of the buy thesis rests on how pervasive Covid continues to be and the need/demand for future boosters. I personally think Covid won't go away and we will continue to need Moderna's vaccine booster into the future. Remember, their product is one of the most effective and also isn't as challenging from a storage/shipping/administration standpoint as the competitors. However, with 67% of the US population already vaccinated, I don't think it's likely that the deniers/unvaxxed are likely to jump on Moderna's product in the future. What does this mean for the longer-term profitability of the SPIKEVAX and can the market grow?
The next buy argument is that Moderna has proven the efficacy and potential of MRNA vaccines. Moderna is positioned to use their industry leading knowledge (and $18 billion cash pile) to develop new vaccines for other maladies. Currently $MRNA has Phase Three vaccine trials underway for cytomegalovirus (CMV), respiratory syncytial virus (RSV), and the flu. Any one of these gaining approval would be a huge boon for profits and for the stock price. Phase 3 Trials typically take 1-4 years and how likely one (or all) of these trials are to hit is beyond me.
The bear case is pretty obvious. Moderna is a one-hit wonder and their only product may be running out of disease to treat. While MRNA vaccines were effective for Covid, they haven't (yet) proven to be successful for anything else. It's a value trap and Moderna may not be able to create any future vaccines.
Personally, I lean more towards the bull case. I think MRNA vaccines are a huge leap forward in medical technology and I have faith that Moderna is well positioned to profit off of this medical revolution. With that said, I'm a newbie on biotech stocks, I don't currently have a position in $MRNA, and I'd love to hear from folks more knowledgable than me. Thanks all!
Leave a Reply