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Moderna: High Profits, Uncertain Future

Moderna (NASDAQ:MRNA) has become one of the hottest stocks in the pharma/biotech world, thanks to its success with its COVID-19 vaccine Spikevax. Moderna has become highly...
Moderna: High Profits, Uncertain Future © Reuters. Moderna: High Profits, Uncertain Future

Moderna (NASDAQ:MRNA) has become one of the hottest stocks in the pharma/biotech world, thanks to its success with its COVID-19 vaccine Spikevax. Moderna has become highly profitable in 2021, and that will persist throughout 2022 and possibly 2023.

Beyond that, however, the company's prospects are less certain. The pipeline is relatively slim still, for a company valued at more than $180 billion. I thus am neutral on the stock for now, as its longer-term prospects are too uncertain for a bullish rating. (See Moderna stock charts on TipRanks)

High Profits in 2021 and 2022

Moderna does own and sell one of the leading COVID-19 vaccines on the market. Its Spikevax vaccine has shown strong results in a wide range of studies when it comes to preventing severe effects of COVID.

This, coupled with Moderna's ability to ramp up production quickly, allowed the company to generate massive revenue and earnings growth in 2021. During the most recent quarter, Moderna generated revenues of $4.4 billion, which was up by a massive 6,500% year over year, aided by the fact that Moderna's revenues prior to the commercialization of Spikevax were very small.

Thanks to its massive revenue growth and the impact of operating leverage, Moderna was able to see its net profits climb at an even stronger rate. Net earnings per share came in at $6.46 during the most recent quarter, which equates to a company-wide bottom line of around $2.8 billion. On an annualized basis, this equates to around $10 billion in net profits -- undoubtedly a great feat for a company that was not profitable prior to 2021.

With almost all of its revenue being tied to its COVID vaccine, however, Moderna will not necessarily continue to grow at the current rate. In fact, most analysts believe that profits will peak in 2021 and that profits in 2022 will be somewhat lower compared to this year's expected net earnings. The consensus earnings per share estimate for 2021 is $29.78 at the time of writing, while analysts are forecasting earnings per share of $27.15 for next year -- which would still be pretty strong and equate to billions of dollars in net profits.

Beyond 2022, however, things become less certain. As the pandemic will hopefully end eventually, which will lead to weaker demand for Moderna's Spikevax, Moderna is forecasted to experience a steep earnings decline in 2023. In fact, analysts are expecting earnings per share of just $11.90 for that year, which is less than half the earnings forecasted for 2021 and 2022.

Interesting Pipeline Assets, but no Certainty

Beyond Spikevax, Moderna owns a couple of interesting pipeline assets, but the outlook for those is not very certain. Among others, pipeline candidates include vaccine candidate mRNA-1647 for Cytomegalovirus, and there also are vaccine candidates for Zika virus and Influenza viruses.

Potentially most interesting is the personalized cancer vaccine candidate that is currently being evaluated in a Phase II study. Oncology is, of course, a very large market in the pharma space, thus success with this candidate could lead to a huge market opportunity for Moderna. It is, however, far from certain that Moderna will be able to repeat the success it has had with Spikevax. Additionally, of course there is a chance that some or even all of its pipeline candidates fail to replicate Spikevax' massive success.

With just 3 Phase II candidates in its pipeline, Moderna has a relatively small pipeline compared to other pharma and biotech companies valued at $150 billion and more. This, in turn, is why I believe that an investment in Moderna is somewhat speculative. At around 15x this year's net profits, shares are not especially expensive, but when we consider the fact that earnings are forecasted to drop in 2022 and 2023, other stocks in this space seem like a better value, I believe.

Turning to Wall Street, Moderna has a Hold consensus rating, based on the 4 Buys, 8 Holds, and 2 Sells assigned in the last three months. At $305.91, the average Moderna price target implies 32.0% downside potential.

Disclosure: At the time of publication, Jonathan Weber did not have a position in any of the securities mentioned in this article.

​Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of Tipranks or its affiliates, and should be considered for informational purposes only. Tipranks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. Tipranks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by Tipranks or its affiliates. Past performance is not indicative of future results, prices or performance.

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24-09-2021 17:03:37 (UTC+7)

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EUR/USD

1.1733

-0.0003 (-0.03%)

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GBP/USD

1.3700

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USD/JPY

110.39

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AUD/USD

0.7267

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USD/CAD

1.2686

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EUR/JPY

129.54

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Copper Futures

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Brent Oil Futures

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US Coffee C Futures

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Euro Stoxx 50

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Adidas AG

280.68

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 EUR/USD1.1733↑ Sell
 GBP/USD1.3700↑ Sell
 USD/JPY110.39Sell
 AUD/USD0.7267↑ Sell
 USD/CAD1.2686Buy
 EUR/JPY129.54↑ Sell
 EUR/CHF1.0829↑ Sell
 Gold1,754.35Sell
 Silver22.665↑ Sell
 Copper4.2280↑ Buy
 Crude Oil WTI73.38↑ Sell
 Brent Oil77.44↑ Sell
 Natural Gas5.068↑ Sell
 US Coffee C192.98↑ Sell
 Euro Stoxx 504,152.99↑ Sell
 S&P 5004,448.98↑ Sell
 DAX15,508.95↑ Sell
 FTSE 1007,049.51↑ Sell
 Hang Seng24,192.16↑ Buy
 Small Cap 20002,259.80↑ Sell
 IBEX 358,862.50Sell
 BASF63.660↑ Sell
 Bayer46.34↑ Sell
 Allianz192.14Sell
 Adidas280.68↑ Sell
 Lufthansa6.197↑ Sell
 Siemens AG148.47↑ Sell
 Deutsche Bank AG10.755↑ Sell
Mua/Bán 1 chỉ SJC
# So hôm qua # Chênh TG
SJC Eximbank5,655/ 5,705
(-20/ -20) # 874
SJC HCM5,640/ 5,705
(-30/ -30) # 873
SJC Hanoi5,640/ 5,707
(-30/ -30) # 875
SJC Danang5,640/ 5,707
(-30/ -30) # 875
SJC Nhatrang5,640/ 5,707
(-30/ -30) # 875
SJC Cantho5,640/ 5,707
(-30/ -30) # 875
Cập nhật 24-09-2021 17:03:39
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ↀ Giá vàng thế giới
$1,754.18+8.370.48%
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ʘ Giá bán lẻ xăng dầu
Sản phẩmVùng 1Vùng 2
RON 95-IV2149021910
RON 95-II,III2139021810
E5 RON 92-II2014020540
DO 0.05S1602016340
DO 0,001S-V1637016690
Dầu hỏa1508015380
ↂ Giá dầu thô thế giới
WTI$73.24-0.04-0.05%
Brent$76.63-0.11-0.15%
$ Tỷ giá Vietcombank
Ngoại tệMua vàoBán ra
USD22.630,0022.860,00
EUR26.044,7927.400,28
GBP30.430,7031.702,11
JPY200,85212,47
KRW16,7620,40
Cập nhật lúc 16:59:22 24/09/2021
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