What happened

Shares of Moderna (MRNA -1.75%) were slipping 5.8% as of 10:52 a.m. EDT on Tuesday. The decline came after Bank of America analyst Geoff Meacham wrote to investors that the stock's valuation has gone "from unreasonable to ridiculous." Meacham reiterated an underperform rating for Moderna with a price target of $115, roughly 75% below the current price of the biotech's shares. 

So what

Does one analyst's opinion matter all that much? Not really. However, it's prudent to understand the reasoning behind analysts' views.

Moderna now has a market cap of more than $185 billion with the vaccine stock soaring more than 340% so far this year. That makes Moderna bigger than several biopharmaceutical companies with higher sales and earnings.

A healthcare professional holding a syringe and vaccine vial.

Image source: Getty Images.

Perhaps the most significant concern about Moderna's valuation is the uncertainty over the company's recurring revenue after 2022. There's no guarantee that Moderna's COVID-19 vaccine will be able to rake in as much money going forward as it will over the next year and a half.

Investors who remain bullish about Moderna, though, will likely point to the company's messenger RNA (mRNA) platform and its growing cash stockpile. They think that Moderna will be able to develop or buy additional blockbuster products that could drive growth for a long time to come. 

Now what

While the debate about Moderna's valuation will probably continue, the main thing to watch with the company now is its progress in securing additional supply deals. Moderna said in its second-quarter update that it already has 2022 supply agreements worth around $12 billion with options of around $8 billion.