Is Procuring Moderna Shares an Intelligent Move Amidst the Price Drops?
Moderna's current situation took a turn for the worse during their presentation at the J.P. Morgan Healthcare Conference. The mRNA pioneer shared disappointing business and pipeline updates, which resulted in a 16% plunge in their share price. This plummet follows a 73% decline in the stock since early June 2024. But, is Moderna a golden opportunity for shrewd investors during this sell-off?
How unsettling is Moderna's recent unfavorable news?
Before diving deeper, let's clarify why the investment community frowned upon Moderna's update. In 2024, the corporation reported product sales between $3 billion and $3.1 billion, which is less than half of the $6.67 billion they reported in 2023. Investors were particularly frustrated by Moderna's outlook for 2025. The company projects revenue between $1.5 billion and $2.5 billion, well below the average analyst estimate of $2.92 billion. Furthermore, even this lower end of the forecast is below Moderna's previous projected revenue range between $2.5 billion and $3 billion for 2025.
Moderna reduced its guidance due to uncertainties in the vaccine market. The company recognizes additional competition in the COVID-19 market and potential lowered vaccination rates. However, they've welcomed a new product, the respiratory syncytial virus (RSV) vaccine mResvia, to their portfolio. Moderna is currently grappling with uncertainty surrounding ACIP RSV revaccination and age group recommendations for mResvia.
Just how unsettling is Moderna's recent bad news? As an objective analyst, I'd rate it an 8 out of 10 on a 1-10 scale, with 1 being least worrying and 10 being the most. Investors who had hopes for a turnaround in Moderna's COVID-19 vaccine sales will be especially disheartened by this outlook.
What's more to the Moderna story?
Although Moderna's near-term projections appear gloomy, it's essential to tread carefully to obtain a holistic picture. The mRNA innovator looks set for a favorable long-term outlook.
Moderna anticipates 10 product approvals over the next three years. These approvals include next-generation COVID-19 vaccines, a combination influenza/COVID vaccine for adults aged 50 and over, and mResvia approval for adults aged 18 to 59. By the end of 2027, the company projects five approvals, resulting in a total addressable market of over $30 billion. Moreover, Moderna envisions cutting their expenses, aiming to save $1 billion in 2025 and an additional $500 million in 2026.
Is Moderna a no-brainer buy during the downturn?
I've long supported Moderna's potential for significant long-term growth, even deeming it a five-bagger by 2030. However, Moderna's most recent update has warranted reevaluation.
If the company hits the low end of its 2025 revenue projection, their stock trades at approximately 9 times forward sales. Despite this, Moderna's enterprise value (EV) is $10.75 billion, significantly lower than its market cap due to a sizable cash stockpile and manageable debt load. If the company manages to generate $2 billion in sales this year (the midpoint of its forecast), their stock will trade under 5.4 times their EV. I consider this an enticing valuation, considering Moderna's growth prospects.
Is Moderna a no-brainer buy during the downturn? While the stock may appear undervalued at first glance, it's crucial to weigh the company's vaccine market challenges and the probability of success in their pipeline programs. Nonetheless, I still view Moderna as a worthy pick for aggressive investors with a long-term investment horizon.
Despite the disappointing business and pipeline updates from Moderna, which led to a significant decline in their share price, the company still has potential for shrewd investors. Moderna anticipates 10 product approvals over the next three years, including next-generation COVID-19 vaccines and mResvia, which could result in a total addressable market of over $30 billion by 2027. However, it's essential to carefully consider Moderna's vaccine market challenges and the success probability of their pipeline programs before making an investment decision. [finance, money, investing]
Investors who are looking at Moderna as a potential investment opportunity should not disregard the current Challenges facing the company in the vaccine market, such as increased competition and potential lowered vaccination rates. But with Moderna's strong pipeline and potential product approvals, they may see significant growth in the long term, making it an enticing opportunity for those with a long-term investment horizon. [finance, money, investing]
