The share price of US biotechnology company Moderna (MRNA), which recently joined the S&P 500 Index (US500), has been trading at record highs after its quarterly earnings report last week. The MRNA stock price put in a fresh high on 9 August, then weakened slightly on 10 August as part of a broader sell-off in biotechnology stocks.
Is Moderna worth investing in now? Or is it too late to make gains on a stock that has soared by 322% year-to-date?
In this article, we look at the company’s recent performance and the latest MRNA stock forecasts from analysts.
Moderna generates revenues from COVID-19 vaccines
Founded in 2010, Moderna is developing a new class of medicines based on messenger RNA (mRNA) research and development.
Among various other vaccines and therapeutics in its pipeline, Moderna is also one of several pharmaceutical and biotechnology firms that have created vaccines to treat the COVID-19 pandemic. Moderna’s mRNA-1273 COVID-19 vaccine, also known as Spikevax, has helped to generate the company’s first substantial revenues.
On 5 August, Moderna reported third-quarter sales of 199 million doses of its COVID-19 vaccine, bringing in $4.2bn of its total $4.4bn in revenue. The remainder of the revenue came from grants.
For the first half of the year, Moderna sold 302 million doses of the vaccine, bringing in $5.9bn of a total $6.3bn in revenue. Net income for the period was $4bn (or $9.30) per share), compared with a net loss of $241m (or $0.66 per share), for the same period in 2020.
The revenue was up $67m from the first quarter of 2020. The company reported a net income of $2.8bn and earnings per share of $6.46 for the quarter, compared with a net loss of $117m or $0.31 per share a year earlier.
Moderna expects to have a dose capacity of between 800 million and one billion for the full year. It has signed Advance Purchase Agreements (APAs) for anticipated product sales of $20bn in 2021, which includes sales recorded in the first half. It has also signed APAs for sales of around $12bn and options of around $8bn for 2022, and expects to deliver two to three billion doses, the company said.
The company has also already started to sign APAs for 2023, as some countries are now preparing for COVID-19 to enter an endemic phase, which will likely require booster vaccinations.
Moderna share price rises on global vaccine roll-out
Moderna set the record in December 2018 for the largest initial public offering (IPO) of a biotechnology company. The IPO raised over $600m and saw the company valued at $7.5bn.
Launching at $23 a share, the stock traded in a relatively tight range between $13–$28 a share until the start of the COVID-19 pandemic in March 2020.
Investors bet that Moderna and other biotechnology companies would benefit from developing a treatment, sending the share price climbing higher.
Moderna started the first trial for its mRNA-1273 COVID-19 vaccine in March 2020 and received fast-track designation in May 2020. The stock spiked to $94.85 on 17 July 2020 as Moderna joined the technology-led NASDAQ 100 Index (US100) on 20 July 2020.
In August 2020, the company announced an agreement to supply the US government with an initial 100 million doses of mRNA-1273, and confirmed advanced discussions with the European Commission for 80 million doses. It also confirmed it was in discussions to supply 40 million doses to Japan.
The share price subsequently trended lower, but In November 2020, biotechnology stocks rallied as Moderna and Pfizer (PFE) announced vaccine efficacy rates of more than 90%. Moderna stock climbed above $150 per share for the first time in November.
The share price dipped in February 2021 and again in March 2021, but has since trended higher, climbing from $132.55 on 1 April to a record high of $497.49 on 9 August 2021. The gains accelerated after Moderna joined the S&P 500 Index of the 500 largest companies listed on US stock exchanges on 21 July, at which time the stock was trading around $300 a share.
The stock climbed from $353.60 on 30 July to $419.05 on 4 August in anticipation of the company’s earnings report. It dipped to $416.26 on 5 August, but resumed its ascent after Australia’s Department of Health granted provisional approval for the COVID-19 vaccine on 9 August. Moderna has agreed to supply the government with 10 million doses of the vaccine in 2021 and 15 million doses of its updated variant booster in 2022.
On 10 August, Moderna also announced an agreement with the government of Canada to build an mRNA vaccine-manufacturing facility in Canada to provide access to Moderna’s vaccines in development for respiratory viruses including COVID-19, the seasonal flu, respiratory syncytial virus (RSV) and other vaccines depending on licensing.
Moderna stock forecast: has the stock become overvalued?
What is the outlook for Moderna’s share value after such a strong rally? What do analysts expect for the company’s share price in the future?
According to MarketBeat, the average Moderna share price prediction from analysts that have issued a rating in the past 12 months is $184.31, indicating how quickly the stock has run up. Estimates range between $250 a share at the high end and $80 at the low end. Seven of the analysts have held ratings on the stock, with five buy ratings and three sell ratings.
Analysts at JP Morgan maintained their neutral rating on the stock in a note to clients after the earnings report, writing that the company is “saving the world even though valued like saving the universe”.
The analysts have a Moderna share price forecast of $170 for December 2022, pointing to a downside of more than 60%.
Analysts at Piper Sandler also take the view that growth from COVID-19 vaccine sales is already priced into the stock: “We are increasing our 12-month price target to $445 from $246, however downgrading to Neutral based on recent share price appreciation fully valuing Spikevax.”
Analysts at Oppenheimer downgraded the stock to perform, without setting a price target: “The company continues to execute superbly on its COVID-19 vaccine portfolio and is moving [from] earlier-stage clinical projects to mid-stage development in various other modalities. However… MRNA shares are fairly pricing a tremendous amount of future recurring revenues and pipeline progress.”
In his recent interview with CNBC, Geoff Meacham, Bank of America analyst, called the MRNA share price “ridiculous”. Meacham reiterated his underperform rating on the stock and kept the price target at $115 a share, a figure 75% lower that the current price.
Meacham added: “While we acknowledge the momentum could continue, we reiterate our underperform rating, especially given broad C-19 expert feedback that goes against overly bullish market sentiment.”
For the longer term, the Moderna stock prediction from forecasting site WalletInvestor predicts the share price will maintain its higher level, ending 2021 at $432.79 and rising to $502.36 by the end of 2022.
The service predicts the price will reach $710.98 a share by the end of 2025.
When considering analyst commentary or predictions from algorithm-based forecasting services, it’s important to keep in mind that they can get their estimates wrong. You should always do your own research to form a view of the outlook for an asset and the relevant market conditions.
How to buy Moderna shares in 2021
One way to trade Moderna shares is with contracts for difference (CFDs) on Capital.com. CFD trading allows you to speculate on the movements in the share price without having to own the underlying stock.
CFDs give you the opportunity to try to profit from both positive and negative price fluctuations. If you expect the share price to continue rising, you can open a long position, whereas if you think it will fall, you can short the stock.
Trade Moderna, Inc. – MRNA CFD
Another advantage of CFD trading is that you can use leverage to open significantly larger positions with a smaller amount of initial capital. However, you should be aware that using leverage also maximises the size of your losses if the share price moves in the opposite direction to your position.
Make sure you understand how CFDs work before you start, and never invest money you cannot afford to lose. Learn more about CFDs with our comprehensive guide. Create an account on Capital.com and stay on top of the latest Moderna stock news and predictions to spot the best trading opportunities.
Whether MRNA shares are a good investment for you over the long term depends on your personal circumstances, portfolio composition and risk tolerance. You should evaluate the level of risk you are prepared to accept and do your own research into potential investments. You should never invest money that you cannot afford to lose.
There is potential for the share price to rise further. However, after a strong rally, some analysts view the stock as overvalued, and it could fall back before resuming its rise in the future. Whether the MRNA share price will go up depends on the roll-out of its COVID-19 vaccine and other treatments in the pipeline, as well as the status of the pandemic worldwide.
Analyst consensus rates Moderna stock a hold after its recent rally. But you may decide to trade the stock to take advantage of the price volatility. As with any other investment asset, you should do your own research to decide which is the right position for your portfolio.