Based on its share price, down 75% in the last three years, it’s easy to write off Moderna (NASDAQ: MRNA) as a biotech that’ll never recover its former glory — which it built on the success of its coronavirus vaccine program. But where there are widespread bearish sentiments about a stock, there’s also often an opportunity for investors who are willing to focus on the long term and appreciate that things won’t always be like they are now.
In that vein, let’s learn about the three most important things you should know if you’re going to consider investing in Moderna today.
Without a growing base of revenue, it’s hard to craft a compelling investment thesis for Moderna or any other stock. Moderna’s trailing-12-month revenue is just over $5 billion, down by 77% from three years ago. Even with ongoing updates to its Spikevax jab for coronavirus, there simply isn’t as much demand for coronavirus vaccines as there was back when the pandemic occupied a larger share of people’s attention.
And despite widespread outbreaks of respiratory syncytial virus (RSV), the recent approval of its RSV vaccine has also not moved the needle much. It isn’t likely that this state of affairs will change soon, which suggests the company’s sales will fall further. In fact, it’s likely to get significantly worse before it gets better. Management expects to bring in a maximum of $3.5 billion in 2024.
Part of the issue is that its RSV vaccine only brought in $10 million in the third quarter, due to its late approval relative to the peak infection season in the Northern Hemisphere. That problem probably won’t recur with the updated version next year, though it’s still unlikely that the program will bring in enough revenue to make it a blockbuster drug.
Overall, the message is that shareholders need to manage their expectations carefully, as the stock may well decline further in the near term.
The second thing that investors need to know about this company is that while the next three years may be rough for shareholders, after that things are very likely to be looking up.
In theory, Moderna will be launching roughly 10 new programs between now and 2028. The programs with the highest earning potential are its combination jab for COVID and influenza, and its therapeutic vaccine for various cancers. All of its new products should help to shore up the base of revenue, and eventually they’ll enable a return to actual growth.
