The global impacts of COVID-19 are finally easing. But in spite of the damage the pandemic inflicted on the economy at large, some companies directly benefited from COVID. Moderna (NYSE: MRNA) was one of those companies, and after the launch of its high-profile mRNA vaccine, the company’s revenue (and its stock) skyrocketed.
Once trading at $18.60 at the time of the company’s IPO in December 2018, MRNA shares soared by as much as 2,300% at the height of the pandemic. But the stock’s peak of nearly $450 in September of 2021 didn’t last for long. Once COVID vaccines rolled out and an end to the pandemic was in sight, MRNA dropped and continued to fall closer to the $100-mark.
While initial investors in the company are still up by over 500% since 2018, more recent investors want to know will Moderna stock recover and reach the heights of 2021 again, especially after this year’s further 37% correction.
The odds are Moderna stock will recover significantly from current levels to analysts’ consensus level of $183 per share. While COVID isn’t capturing every headline anymore, it hasn’t gone away. There are new variants and new data suggests that hospitalizations are increasing due to the deadly disease. And Moderna has been working hard to expand beyond COVID; the company has a pipeline of treatments on the way to treat many other diseases.
Why Did Moderna Stock Drop?
There’s no doubt that the reduced demand for the company’s COVID vaccine has caused MRNA share price to drop, but how bad is it?
Moderna just released its 2nd quarter of 2023 earnings report, and it paints a dire picture at first glance. Revenue of $344 million was a 92.6% decrease from $4.7 billion in total revenue in the same quarter of 2022.
The company’s net loss of $1.4 billion in the second quarter stands in stark contrast to the net profit of $2.2 billion one year ago. But total revenue exceeded analysts’ expectations by over 12% in the 2nd quarter, and it was a similar beat for EPS.
The decreased demand for the vaccine isn’t the only reason the stock dropped. The company experienced a rash of bad publicity on the news that its COVID-19 vaccine was priced at $130 in the US. The backlash was largely due to the gap between Moderna’s initial vaccine cost of $26.
The move landed the company in hot water with the US Senate, with legislators claiming that the Moderna vaccine was funded by taxpayers and was far overpriced for a vaccine that only cost $3 to make. Moderna responded that the company had more than paid back the government and the price was fair given the current market conditions.
Is Moderna a Good Stock To Buy Now?
Despite the issues Moderna has faced around its COVID vaccine, there’s still hope for a short-term turnaround.
Recent results from clinical studies indicate that the new Moderna vaccine is effective against new variants of the disease that are poised to wreak havoc this fall.
The Eris and Fornax variants are expected to grow in impact, and that news, coupled with word that the Biden administration will be pushing booster shots in the US in the fall provided the stock a momentary boost.
Is Moderna a Good Long-Term Stock?
The dependency on COVID vaccine revenues has driven the company to seek out other avenues for future revenue. But an experimental flu vaccine has met roadblocks in late-state trials, and that’s only fueled the fire for investors who were already ready to pass on MRNA stock.
But there are still positive avenues for the company. A recent announcement about a partnership with Generation Bio was an indicator of Moderna’s willingness to adapt in its drug delivery model.
In spite of the recent uptick in COVID cases, Moderna’s pipeline of vaccines for other diseases might be the most profitable for the company. These vaccines, which Moderna hopes will reach the market by 2030, are designed to conquer new vistas by providing treatments for cancer, heart disease, and other life-threatening conditions.
Despite the hope for the future, FDA trials and approvals for the company’s products still loom large for news-hungry investors.
How High Could Moderna Stock Go?
Because of the uncertainty around MRNA at the moment, analysts are split on the future of the stock. Among 22 analysts, 10 believe that Moderna stock is a Buy at this price point, with 2 of those analysts predicting the stock will outperform the market. The most bullish analyst has MRNA shares jumping over 280% to $430.
The consensus forecast is still quite bullish, predicting MRNA will rise to $183 over the next 12 months. But there are 10 analysts who rate the stock as a hold, and 2 sell ratings on MRNA. The most bearish analyst forecasts the stock will drop by nearly 40% to $68 over the next year.
Will Moderna Stock Bounce Back?
Moderna became a household name during COVID-19, and the pandemic is a major reason why the company still has a market capitalization north of $40 billion. But post-COVID, Moderna has struggled to find other revenue drivers and sharp drops in sales of its flagship product revenue as well as profitability have caused many investors to move on from MRNA.
Moderna hopes to capitalize on the increase in COVID cases that are likely in store in the fall, and its vaccine has proven effective against current strains of the virus. The company has continued to develop vaccines that target RSV and Flu, and those treatments could save lives and bolster revenue for Moderna at the same time.
Because the future of Moderna rests on drugs that are still in clinical trials, and short-term issues won’t dissipate anytime soon, MRNA stock is for speculative investors who don’t mind weathering short-term volatility for the possibility of long-term returns.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.