Moderna (NASDAQ: MRNA) is one of the big pharmaceutical companies that has been producing COVID-19 vaccines. After initial trials showed that it was effective, the Massachusetts-based firm began rolling out this vaccine across the world. Numerous other companies have their own COVID-19 vaccines, so there is plenty of competition in this space. Therefore, a lot of investors are trying to figure out if Moderna stock is a good buy.
The bull case for Moderna
The development of its COVID-19 vaccine has been massive for Moderna. It went from generating revenue of just $67 million in Q2 2020 to $4.4bn for Q2 2021. According to recent CDC studies, it appears to be one of the more effective vaccines on the market.
Moderna estimates that it will manufacture somewhere between 800 million and 1 billion doses of the vaccine this year. This puts it only behind Pfizer (NYSE: PFE) in terms of these targets. With it looking likely that booster shots will be needed down the line, it could be a very successful few years for Moderna. Moderna has also managed to turn a profit, with net income reaching $2.8 billion in the latest quarter.
As well as the COVID-19 vaccine, Moderna is contributing to work on other types of treatments. It has ongoing clinical trials in five therapeutic areas, which include autoimmune disorders, rare diseases, oncology, cardiovascular, and infectious diseases. Its focus on developing mRNA vaccines is something different and could pay off significantly if everything goes right. However, any such success will likely be a long, drawn-out process over many years, as opposed to the flash in the pan that was its COVID-19 vaccine.
The bear case for Moderna
Naturally, the big bear case for Moderna is the major reliance on its COVID-19 vaccine for the vast majority of its revenue. In Q2, about $4.2 billion of the $4.4 billion in revenue came from this vaccine. While the rollout of vaccines across the world will continue for some time, in addition to booster shots, investors want to see potential in other areas of the business.
It is likely that there will be a big drop off in the sales of these vaccines after 2022. There is also a pricing issue, with Moderna vaccines being somewhat more expensive than many alternatives that are being looked at overseas. This could put a dampener on order quantities in the coming years.
While it has ongoing clinical trials in a number of different treatment areas, these could ultimately prove to be unsuccessful. The share price has also increased by over 570% over the past 12 months. Therefore, many investors see Moderna as being an expensive buy at the moment. A lot of the future prospects of the company appear to already be priced in.
So, should I buy Moderna stock?
Moderna stock does not look to be a good investment at this point in time. While it has benefitted massively from the rollout of COVID-19 vaccines, it appears that the company is over-reliant on this particular business segment.
Competitors like Pfizer have a lot more diversification in their business, as well as representing more value in the long term. The current Moderna share price also does not look very attractive, so many investors might stay away due to these reasons.
Pharma stocks not your thing? Well, you are in luck because MyWallSt has got a shortlist of market-beating investment opportunities so you can start generating long-term wealth. Start your free trial now.
Who is the CEO of Moderna?
Stéphane Bancel has been the CEO of Moderna since 2013.
Is Moderna profitable?
Moderna generated a net profit of $2.8 billion in Q2 2021.
Does Moderna pay a dividend to shareholders?
Moderna does not currently pay a dividend to its shareholders.
Contributing Writer at MyWallSt
Andrew is a contributing writer to MyWallSt. He is a full-time finance writer, having spent time working in the industry. He studied Economics and Finance and has been fascinated with the financial markets since his teens. The first stock that Andrew bought was Apple, reflecting his love for its products.