If you invested in COVID-19 vaccine maker Moderna (MRNA -1.75%) last year, you're likely sitting on a fantastic return, as the stock is up more than 500% in 12 months (the S&P 500 has increased by just 31%). But the danger in continuing to hold the stock or buying it today is that it could crash in the months ahead, perhaps even before the end of 2021.

With a pricey valuation that's significantly higher than analyst price targets and a business that today is dependent on COVID-19, it may only be a matter of time before a correction takes place. Here's a closer look at why I wouldn't be surprised if the stock were to fall.

A doctor looking at a tablet with another person.

Image source: Getty Images.

Moderna could soon face more competition in the U.S.

Currently, Moderna is just one of three companies (the others being drugmakers Johnson & Johnson and Pfizer) with COVID-19 vaccines that are available for use in the U.S. market. But there could soon be another, from vaccine maker Novavax. That company plans to apply for Emergency Use Authorization (EUA) from the U.S. Food and Drug Administration for its vaccine before the year is over. If that happens, expect some downgrades from analysts, as it could be a sign that market share for Moderna will shrink in the U.S.; Novavax may even become the better stock to buy.

Plus, with vaccination rates on the rise in the U.S. -- more than 50% of those eligible are fully vaccinated -- the pool is already shrinking. While there may be a market for booster shots next year, scientists are conflicted on whether that's necessary. And even if people take the shots, that would just be one extra dose compared to the two shots needed for someone to be fully vaccinated (with the Pfizer and Moderna versions).

As a result, the focus will inevitably shift to other countries where there are more vaccines for people to choose from. In addition to that, Moderna's vaccine may be less competitive due to its high price.

Even more challenges outside the U.S.

Moderna recently increased its price per dose in Europe, from $22.60 a dose up to $25.50. That's steep compared to AstraZeneca, which offers its vaccine at cost at just a couple of dollars per dose. Vaccines from Sanofi and GlaxoSmithKline are also cheaper than Moderna, coming in at less than $10 per dose. With a significant premium compared to its rivals, Moderna's vaccine may prove to be a tougher sell for countries that have more options available.

As of June, the U.S. government has ordered 500 million doses of Moderna's vaccine, while in Europe, officials have purchased 460 million doses. Although that's not a huge disparity, Europe's population of about 750 million people is more than twice the size of the U.S.

In other parts of the world, the pricing is going to be even lower. Covax, which is a worldwide initiative to help all countries get access to COVID-19 vaccines, has secured up to 500 million doses of the Moderna vaccine. But only 34 million of those vaccines will be delivered this year. Covax has an option for the remaining 466 million next year.

While a specific price per dose was not noted in the agreement, Moderna confirmed that these will be sold at its lowest price tier, which is "considerably lower than the price to the U.S. government" (the U.S. pays approximately $15 per dose).

Downgrades and bearishness are inevitable for this soaring stock

Moderna's stock is currently trading at a price-to-earnings ratio of more than 50. That's well in excess of the 19 times earnings that investors are paying for Pfizer and the 27 times profit that the average holding in the Health Care Select Sector SPDR Fund is fetching. The stock is already obscenely overpriced, and that's even factoring in a recent upgrade from Morgan Stanley, which raised its price target for Moderna from $190 to $337.

Long-term investors may point to the company's pipeline. But currently, the most promising product it has is a vaccine for cytomegalovirus that's entering phase 3 trials. With analysts expecting peak annual sales of no higher than $5 billion, it isn't likely to make up the gap post-COVID. For the three-month period ending June 30, Moderna reported revenue of $4.4 billion, thanks to its COVID-19 vaccine sales.

Between the FDA's possible EUA for Novavax's vaccine candidate and analysts potentially readjusting their price targets for Moderna to reflect a greater need to focus on markets outside of the U.S., there could be some bearishness ahead for the healthcare stock. If you've made a good profit on Moderna thus far, now may be time to consider cashing out. Its shares may have already peaked when they nearly topped $500 earlier this year.