The stock price of Moderna saw a 12% jump on Tuesday, January 7, amid rising cases of Covid-19 and flu in the U.S. Along with Moderna, stocks of other vaccine makers also saw an uptick. Novavax was up 11%, while BioNTech ADR was up 5%. According to the CDC, influenza’s test positivity rate increased from 13.6% for the week ending Dec 21 to 18.7% for the week ending Dec 28. The Covid-19 positivity rate has also seen a rise to 7.1% this past week, versus the 5.5% figure for the past four weeks. The CDC has recommended that everyone of age six months and above gets an annual influenza vaccine.
This implies an increase in the sale of vaccines from the likes of Moderna, Novavax and Pfizer. Moderna’s recently approved respiratory syncytial virus vaccine has been struggling to garner meaningful revenues so far (just $10 million in the previous quarter), given that the vaccine distributors had completed their orders before the regulatory approval came in for Moderna’s RSV vaccine.
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Moderna has been struggling amid its falling sales post the 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. The company’s latest RSV vaccine is yet to show promising sales. This has weighed on MRNA stock, down 52% since early 2024.
Even if we look at a slightly longer period, the changes in MRNA stock over the last four-year period have been far from consistent, with annual returns being considerably more volatile than the S&P 500. Returns for the stock were 143% in 2021, -29% in 2022, -45% in 2023, and -58% in 2024. While MRNA stock has seen mixed growth over recent years, the Trefis High Quality Portfolio, with a collection of 30 stocks, has provided better returns with less risk versus the benchmark S&P 500 index over the last four year period; less of a roller-coaster ride as evident in HQ Portfolio performance metrics.
Now, could MRNA face a similar situation as it did in 2022, 2023, and 2024 and underperform the S&P over the next 12 months — or will it see a recovery? From a valuation perspective, we think MRNA is undervalued at levels of under $50.
We think 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, 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 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 $9.7 billion, which could help it make some acquisitions in the biotech space. Notably, the $74 average of analysts price estimate reflects more than 50% upside from its current levels of $48.
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.
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