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What Are the Long-Term Prospects for Moderna?

By Keith Speights and Brian Orelli, PhD - Feb 21, 2021 at 11:01AM

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The biotech's messenger RNA platform is promising. But some investors could have qualms about its current valuation.

There's no question that Moderna (MRNA 0.70%) is about to have a very good year financially. The biotech has major supply deals lined up for its COVID-19 vaccine and is hard at work cranking out millions of doses. But what are Moderna's long-term prospects? In this Motley Fool Live video recorded on Feb. 10, 2021, Motley Fool contributors Keith Speights and Brian Orelli discuss how Moderna might fare going forward.

Keith Speights: Moderna long-term view. The ticker there is MRNA. What's your quick thoughts on the long-term prospects for Moderna?

Brian Orelli: Moderna has great long-term prospects, whether it justifies the $71 billion market cap is debatable. Biogen has many drugs on the market, and they are at 41 billion. Regeneron has many drugs on the market and they are at 52 billion. Moderna's at 71 billion and they have one drug on the market.

We don't really know exactly how long those sales are going to last, whether there's going to be one-off sales or whether we're going to have to keep getting vaccinated every year. I like Moderna's pipeline. I like their technology, it's definitely proven out. But I have a hard time seeing $71 billion worth of value in the pipeline.

Speights: You and I have had this discussion before. If you're going to invest in Moderna, you need to be a long-term investor because over the long run, the company could roll out plenty of other mRNA therapies and vaccines and be a big winner. Over the short run, it probably doesn't have enough catalysts to cause the stock to jump a whole lot more over the next year or so.

Orelli: Even a double from here is a $140 billion mark up [laughs]. Are we getting to the size of Pfizer [laughs] at that point? Let me look at Pfizer's.

Speights: Pfizer is over 200 billion market cap, right?

Orelli: Yeah, has a 193.

Speights: Okay.

Orelli: A triple from here gets you to the size of Pfizer. That feels like a stretch considering how long Pfizer has been around. To get to the size of a Pfizer in a decade still feels even a little much. I feel like the valuations are really high right now. I'd much rather own other biotech companies that are smaller and have more catalysts to see how they can get from point A to point B in valuation.

Speights: Even when Moderna was at a 30-40 billion market cap, I thought, OK, you could argue that it's overpriced, but their platform potential, I could see that. But you're right, at $70 billion market cap, you really start to wonder how much more room this stock is going to have to run at least over the next couple of years or so.

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Stocks Mentioned

Moderna, Inc. Stock Quote
Moderna, Inc.
$144.27 (0.70%) $1.01
Pfizer Inc. Stock Quote
Pfizer Inc.
$51.59 (3.00%) $1.50
Regeneron Pharmaceuticals, Inc. Stock Quote
Regeneron Pharmaceuticals, Inc.
$612.49 (0.84%) $5.10
Biogen Inc. Stock Quote
Biogen Inc.
$211.93 (0.26%) $0.55

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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