Is COVID Vaccine Maker Moderna Poised To Pop Or Drop?

Key Takeaways

• Moderna’s stock dropped slightly in early November when it released disappointing financial results for the third quarter of 2022.
• The company had to slash its original full-year outlook due to ongoing supply chain issues that have proven to be challenging.
• Moderna CEO Stephane Bancel was optimistic on the earnings call by stating that the company is testing out vaccines for influenza, RSN, and other rare diseases.

Moderna became a household name for creating one of the first COVID-19 vaccines, helping to loosen up pandemic restrictions globally.

Moderna’s stock went up during the pandemic for apparent reasons as countries were scrambling to purchase mass quantities of vaccines so they could open up their economies and protect their citizens.

Due to a drop in vaccine sales, Moderna has seen its stock slide in 2022. We’re going to look at the future of Moderna’s stock to determine if this COVID vaccine maker is worth investing in right now.

What’s happening with Moderna?

Moderna (MRNA) reported an earnings miss due to decreased demand for vaccines and issues that slowed down the production of COVID vaccines.

Since the COVID-19 vaccine is the only commercial product for Moderna, there are concerns about the financial future of the company. On the flip side, fears of winter variants of COVID continue to loom over us as most of the world has opened up.

Sales for the third quarter had a 35% drop year-over-year due to a variety of factors, ranging from the population already being vaccinated to unique production challenges.

The supply chain issues originated from different vaccine requests from Europe and the U.S. since the latter decided to pursue a BA.4/BA.5 bivalent booster rather than an Omicron/BA.1 booster. This put the capability of Moderna and the mRNA platform in a compromising situation.

Many deliveries have been pushed into 2023 due to supply chain issues that should be resolved soon.

Moderna’s third quarter financial results

Moderna’s stock dropped slightly in the pre-market trading on November 3 based on the poor financial results for the third quarter of 2022. However, it’s been on a reasonably upward trajectory ever since, down 2.3% over 5 days, but up 16.7% on the month as of market close on Monday, November, 28.

Here are some of the highlights from Moderna’s third-quarter financial results:

• Total revenue for the third quarter of 2022 was $3.4 billion, down from $5.0 billion year-over-year.
• Product sales were at $3.1 billion, down about 35% year-over-year.
• Diluted earnings were $2.53 per share, below the consensus estimate of $3.30 per share.

The weak financial results were due to declining sales of the COVID vaccines. Moderna also cited that the timing of market authorization for the COVID-19 bivalent boosters hurt them. The forecasted demand heading into 2023 looks grim.

How’s the competition doing?

It’s worth looking at Pfizer’s performance, Moderna’s main competitor when it comes to vaccines. Pfizer reported third-quarter sales of its COVID vaccine at $4.4 billion, with an updated annual sales projection of $34 billion, up from the original $32 billion figure.

This is insightful information as Pfizer is the primary competitor of Moderna in this space. Analysts weren’t impressed with how much Moderna’s numbers dropped compared to Pfizer’s.

What’s next for Moderna?

There was a point in recent history when vaccines were the key to re-opening societies and economies alike. As the pandemic restrictions have loosened up, investors are wondering if Moderna can build on its previous success. And when?

While Moderna stock started to take off in 2020, the company struggled in 2022. As of November 25, Moderna stock is down about 25% for the year with a share price of $176.40. Compared to its high of almost $450 in September 2021, this is a substantial decline.

Vaccine demand and prices are shifting

As the coronavirus becomes increasingly endemic, vaccine makers are dealing with reductions in revenue. Health data analytics group Airfinity forecasted sales of COVID-19 vaccines could drop by about 20% to $47 billion next year.

In response, vaccine makers are raising the prices of a dose to compensate for the drop in demand. The average dose price is expected to increase to $37 next year, which is almost double the amount per dose in 2021.

The U.S. market is moving from government purchases to a private market, where Moderna believes that they could charge up to $100 per shot. Airfinity also believes that 1.6 billion vaccine doses will be delivered in 2023, down from 3 billion in 2022 and 5.7 billion in 2021.

Moderna has even stated that they have purchase agreements worth between $4.5 billion and $5.5 billion in anticipated vaccine sales for 2023. These numbers are below the original estimates of $9.5 billion in sales for 2023.

The company’s chief commercial officer, Arpa Garay, mentioned how the figures behind the number of booster shots administered were reasonably low. Moderna also expects global demand for vaccines to be similar to that of flu shots since COVID is more of a threat.

Based on that assumption, this would indicate that the annual demand for COVID vaccines would be around 600 million doses. However, it’s important to stress that nobody can truly predict what the vaccine dosage numbers will be like based on recent history.

Moderna’s cash position

Moderna reported that it had cash, cash equivalents, and investments of $17 billion at the end of September. This is down from the $17.6 billion the company had at the end of 2021.

Moderna is working on a new vaccine to cover multiple issues

The company recently announced that they want to deliver a vaccine that provides protection for everything in one. It is developing a vaccine against COVID-19, the flu, and RSV, even though it hasn’t received regulatory approval yet.

Moderna has commented that they expect to submit the vaccine for approval within a year. The product is controversial since the company is promoting the vaccine before completing Phase 3 clinical trials.

Supply chain issues are disrupting sales

Modern had to slash its forecast for COVID vaccine sales for 2022 due to delays in deliveries attributed to supply chain problems.

The company stated that it expected vaccine sales to generate revenues of $18 billion to $19 billion for the year, which is down from a forecast in August of $21 billion.

This delay means that orders worth between $2 billion and $3 billion should be delivered in 2023.

What caused these supply chain issues? Apparently, Moderna had to deal with complex manufacturing issues. They had to launch two bivalent booster jabs simultaneously due to a request from U.S. authorities for a booster that would target the BA4/BA5 strains.

Reportedly, there were also short-run issues with how manufacturers handled filling vials with the vaccine.

That said, this does not appear to be the best time to invest in Moderna stock. With the signed agreements for Moderna in 2023 ranging between $4.5 billion to $5.5 billion, it’s clear that analysts aren’t impressed with this figure being below the original forecast of $9.35 billion. And without a more substantive track record on the business side to bolster near-term expectations, Moderna appears to be a longer investment, given the promise of mRNA technology.

How should you be investing?

Writing about investing your money and vaccines is challenging as both topics have become somewhat intertwined over the last few years.

Vaccines allowed many countries to open and reduce pandemic-related restrictions. On the other hand, it’s difficult for vaccine makers to sell vaccines when there isn’t a global demand.

While many healthcare stocks tend to be recession-proof due to the nature of the industry, it’s difficult to know where you should invest your money.

The good news is that Q.ai takes the guesswork out of investing. Using artificial intelligence (AI), Q.ai scours the markets for the best investments for all manner of risk tolerances and economic situations.

Then, it bundles them up in handy Investment Kits that make investing simple. You can also activate Portfolio Protection at any time to protect your gains and reduce your losses no matter what industry you invest in.

Bottom Line

Investors will have to monitor the situation to see if folks continue with booster shots or if they opt for the traditional flu shot.

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