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Everyone Is Talking About This Stock. Is It a Good Long-Term Option?

By Adria Cimino – Sep 14, 2021 at 6:00AM

Key Points

  • This company sells one of the world’s most-needed products right now.
  • It also expects that product to bring in $20 billion in revenue this year.

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The shares have soared -- but for good reason.

These days, the name Moderna (MRNA -1.70%) would make just about anyone think of the coronavirus vaccine. In only a year and a half, Moderna went from being a $6 billion biotech with no commercialized products or profit to a profitable, $184 billion vaccine powerhouse. Lives were saved...and fortunes were made. The stock has climbed more than 300% so far this year.

It's clear Moderna has been an excellent medium-term investment. But what about beyond that? Does Moderna have what it takes to make you richer if you hold onto the stock for the long term? Let's take a closer look at this innovative company and find out.

Someone looks pensive while studying something on a laptop in a home office.

Image source: Getty Images.

From vaccine design to market leadership

Moderna's path from vaccine design to market leadership has been pretty smooth. The company successfully completed clinical trials, received authorization in the U.S. in December, and secured billions of dollars in contracts worldwide. Vaccine delivery rolled out smoothly. And revenue has been rolling in.

In fact, Moderna has generated so much revenue that it became profitable after only one full quarter of vaccine sales. Most recently, the company reported $2.8 billion in quarterly profit; it expects full-year vaccine sales to total $20 billion. The news gets even better: Moderna now has $15 billion in cash in its coffers.

This is a great picture. But can the good times keep rolling? Moderna is doing everything in its power to make that happen.

First, let's look at its prospects in the coronavirus vaccine market. A few months ago, CEO Stéphane Bancel said he expects need for the vaccine next year to be even stronger than need this year. He's probably right.

As variants of concern emerge, countries aim to convince their most reticent residents to protect themselves by getting vaccinated. Some companies and organizations are even making vaccination mandatory for most employees. In fact, President Joe Biden last week announced new measures to make vaccination mandatory for government employees, healthcare workers, and anyone working for businesses with more than 100 employees.

On top of that, it's clear that everyone will eventually need a booster shot. And regulators may authorize vaccines for the youngest age groups in the coming months. All of this means that countries will eventually need more vaccine doses.

Products of the future

Farther into the future, Moderna may wow the crowd with newer products. For instance, the company is working on a one-dose combined coronavirus and flu vaccine. And it's exploring a next-generation coronavirus vaccine that specifically targets two areas of the spike protein critical to the neutralization of the virus. If these candidates reach commercialization, Moderna may continue to generate billions of dollars from coronavirus vaccine products for years to come.

But even with all of this going on, if Moderna was only a coronavirus vaccine company, I'd be a little worried. I don't like betting on just one product -- especially when it relates to a virus. Experts predict the coronavirus will be around for the long term, but there are no guarantees.

Moderna, however, is more than just a coronavirus vaccine developer. Aside from its coronavirus program, the one nearest to market is its vaccine candidate for cytomegalovirus (CMV), a common virus that can be particularly dangerous for those who are pregnant or who have weakened immune systems. Currently, no vaccine exists. Moderna's program is set to enter phase 3 trials this year. The company expects sales from a CMV vaccine to bring in $2 billion to $5 billion annually.

And Moderna boasts 37 programs in all, 22 of them at clinical stage, so there are many potential revenue drivers down the road. With the coronavirus vaccine, Moderna demonstrated that its mRNA technology works. This is reason to feel encouraged about the potential of Moderna's mRNA technology in other pipeline programs.

Is Moderna worth $450 a share?

Still, is Moderna really worth the $450 per share it's trading for today? It depends on your investment horizon.

If you're in for the long haul -- and that's the best way to invest -- it's not too late to buy Moderna shares. In the near term, pullbacks wouldn't surprise me. But it's impossible to time a purchase to get in at the very lowest price. So, as a long-term investor, I wouldn't worry too much about declines here and there; they won't matter in the long run.

Considering the prospects for Moderna's coronavirus vaccine and other pipeline programs, there's plenty of fuel to keep this biotech stock moving higher for years to come.

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

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$170.20 (-1.70%) $-2.95

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