Moderna (MRNA 1.58%) has been one of the hottest stocks to buy over the past year, soaring more than 340% while the S&P 500 has increased by just 30% during that time. The company's COVID-19 vaccine has put Moderna on the map with investors, sending its market cap from less than $10 billion to more than $52 billion. And if its CEO is right about COVID-19 being around forever, the vaccine could deliver recurring income for many years. 

However, Moderna's shares have been crashing over the past month despite a strong earnings report. Is March a good time to load up on the stock or should investors wait for more of a dip in price before investing in the company?

Doctors wearing PPE stand in a corridor of a hospital.

Image source: Getty Images.

A lot depends on the future of COVID-19

Moderna's vaccine for COVID-19, mRNA-1273, has significant sales potential. The company expects the vaccine (which is also the first product Moderna's ever brought to market) will generate a staggering $18.4 billion in revenue in 2021. Those numbers would blow past Moderna's 2020 revenue, which at $803.4 million was already 13 times higher than 2019's top line of $60.2 million. 

Whether you think Moderna is a buy or not will likely come down to your outlook for the pandemic. If you anticipate that it will be around for the long term, then Moderna could certainly play a big role in containing the coronavirus. However, there is also the risk is that as more companies get the nod from the U.S. Food and Drug Administration (FDA) for their vaccines, there will also be more options for health officials to choose from, which will chip away at Moderna's market share.

The FDA granted Johnson & Johnson's single-dose vaccine Emergency Use Authorization (EUA) on Feb. 27, making it the third vaccine that will now be available in the U.S., in addition to those from Moderna and PfizerAstraZeneca anticipates the FDA will issue its vaccine EUA in April while Novavax projects it will get the green light in May.

But Moderna's vaccine doesn't need to be one of the only two or three options to generate significant sales. Even if it generated half of that $18 billion on a recurring basis (perhaps through booster shots to treat variants of COVID-19), that along with other products in the pipeline could make it a formidable healthcare investment worth hanging on to. 

One of the most promising vaccines in its pipeline today is mRNA-1647, which is for cytomegalovirus (CMV). On Feb. 25, when the company released its fourth-quarter earnings for the period ending Dec. 31, 2020, Moderna said its phase 3 study for the drug would begin "soon." But even that vaccine, at its peak, could generate between $2 billion and $5 billion in sales for the company -- a small fraction of what Moderna looks to make from mRNA-1273. The company also has a vaccine for the Zika virus that is still in its early stages and that could be a "several hundred-million-dollar annual peak sales opportunity."

The business isn't entirely dependent on COVID-19, but the outlook for the pandemic definitely factors into the stock's hefty valuation; the worse it is, the more valuable Moderna becomes.

Moderna's stock is cheap(er) -- but is it low enough to buy?

Although Moderna is coming off a strong fourth quarter, where sales came in at $570.7 million (compared to just $14.1 million in the prior-year period), its shares have fallen more than 30% in just the past month while the S&P 500 is down just 1%. That is likely to do with a more favorable view of the pandemic and hope that things could soon be getting back to normal, especially now that President Joe Biden anticipates that by the end of May, there will have been enough vaccines available to inoculate all adults in the U.S.

Moderna's price today isn't anywhere near its 52-week lows or even close to $100 -- which it nearly fell to at the end of 2020. However, when looking at its forward price-to-sales (P/S) ratio, there does appear to be some great hidden value here:

MRNA PS Ratio (Forward) Chart

MRNA PS Ratio (Forward) data by YCharts

Moderna compares well against the other COVID-19 stocks mentioned earlier as its future revenue from mRNA-1273 makes its valuation look attractive.

Should you buy Moderna stock?

With a low P/S multiple and a good year ahead, Moderna's stock could potentially make for a solid investment. I wouldn't go so far as to say it is a great long-term investment, only because there are too many question marks surrounding COVID-19 in the years ahead. That includes whether mRNA-1273 will be needed beyond this year, if booster shots will be required to maintain immunity, and, ultimately, how much money the company might generate from pandemic-related revenue. Those are all variables that are unknowns right now and that makes it difficult to predict if Moderna is worth hanging on to over the long term.

The stock looks great, potentially for the next several months, or even the entire year. But beyond that, it becomes a riskier buy. So, while its share price is lower in March, long-term investors may still want to see the stock fall even further (perhaps below $100) before Moderna's stock is cheap enough that it makes up for some of that risk.