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Is It Too Late to Buy Moderna After Its 40% Gain?

By Adria Cimino - Apr 20, 2021 at 6:15AM

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This pattern has happened before.

Moderna (MRNA 3.05%) offered investors a big buying opportunity over the past six weeks. Shares of the coronavirus vaccine maker dropped as much as 36% from their all-time high. At the same time, news has been positive. The company continued the rollout of its vaccine and announced enrollment in trials of booster candidates targeting variants of concern.

Then, finally, the rebound Moderna investors were waiting for gradually happened. Over the past three weeks, the stock has climbed about 40%. In fact, today the shares are only a few dollars away from Wall Street's average 12-month price estimate.

Now, the question: Is it too late to buy Moderna shares? Let's find out.

An investor stands over his computer and looks pensively out the window.

Image source: Getty Images.

Above the record high

From January 2020 through January of this year, Moderna stock has dropped significantly three times. And each time, it recovered and climbed above its previous record high. It looks like that now may be happening for the fourth time. This may be a pattern of investors locking in profits, then repurchasing shares at a lower price -- and newcomers jumping aboard too.

MRNA Chart

MRNA data by YCharts

Moderna's path from the time it entered the vaccine race through today has been smooth. There hasn't been a major reason to flee the shares. And though the stock is on its way back to a record high, it may not stop there.

Moderna is looking at two major catalysts, and they may be only a few months away.

The most significant is the company's potential booster program. Moderna's in vitro tests earlier in the year showed its vaccine worked against the U.K. and South African strains. But, facing the South African strain, efficacy declined.

So, Moderna brought not one but three booster candidates into clinical trials. The company is studying an extra dose of its original vaccine, a booster designed to target the South African spike protein, and a combination of the original vaccine and the booster candidate. And Moderna recently said its booster may be available by fall.

Revenue ahead

How does this translate into revenue? Moderna has secured supply agreements worldwide for at least 800 million doses. That means those doses can fully vaccinate about 400 million people. And that means those countries likely would order the booster dose to complete the vaccinations of their citizens. Moderna hasn't said how much each country is paying for its vaccine. But we can use the price paid by the U.S. as a guide. That's $15 a dose. The 400 million people I just mentioned will need a booster, so that could generate $6 billion for Moderna.

The other near-term catalyst for Moderna is the potential expansion of its vaccine's use into the teen market. The company expects to report teen trial results in the coming weeks -- and hopes to commercialize the vaccine in that group in time for the fall school year. It may have to share the market with Pfizer, which recently reported teen trial results and requested Emergency Use Authorization. 

About 25 million Americans are ages 12 through 17, according to Kids Count data. That represents potential revenue of $750 million for a two-dose Moderna vaccine regimen.

Comments from experts and executives indicate coronavirus vaccine revenue may be annual. For instance, Pfizer CEO Albert Bourla recently told CNBC that annual vaccination would be "a likely scenario."

Is Moderna a buy?

Considering these elements, is Moderna a buy at these levels? My answer is "yes." It's possible Moderna shares will go through another lull down the road. It's possible longtime investors will sell some shares to lock in profits.

But overall, I expect Moderna stock to climb higher over time. In the near term, a booster and expansion into the teen market can offer a lift. Beyond that, the company's two dozen pipeline programs make me optimistic. Next to market may be a cytomegalovirus (CMV) vaccine -- the candidate is set to enter phase 3 this year. (CMV is a common virus that is worrisome for pregnant individuals or people with compromised immune systems.)

So, recent gains wouldn't scare me away from this biotech company. Moderna shares still offer a big opportunity for long-term investors.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool recommends Moderna Inc. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Moderna, Inc. Stock Quote
Moderna, Inc.
MRNA
$176.40 (3.05%) $5.22
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Pfizer Inc.
PFE
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