Some people might have thought Moderna's (MRNA +1.41%) stock market gains were over when the company pocketed an Emergency Use Authorization for its coronavirus vaccine in December. After all, the stock advanced 434% in 2020. But investors continued rewarding Moderna -- for generating billions of dollars in vaccine revenue, for turning a profit, and for working on new programs in the coronavirus vaccine space.
As a result, the stock soared 363% from the start of the year to a high of more than $480 a share in August. Moderna has since pared gains. The stock now trades at around $400. But an increase can happen quickly for this dynamic biotech stock. So now, many investors are wondering: Will Moderna shares reach $500 in the near term? Let's take a closer look.
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Looking a little pricey
Moderna may seem to be getting a little pricey. If we look at biotechnology company stock prices, it is second only to Regeneron. That company trades for more than $600 a share. It's important to keep in mind that Regeneron commercializes eight products. Moderna commercializes only the coronavirus vaccine.
But it's also important to keep in mind that the coronavirus vaccine stands out from the crowd. It's one of the world's most needed products right now. And that may continue into the future. Experts say the coronavirus is likely to stick around -- well beyond the pandemic. This means demand for Moderna's product may remain strong for quite some time.
Still, for the shares to reach $500 in the coming months, we'll need catalysts. And there just so happen to be at least three possibilities: the potential authorization of a booster, expansion of vaccine use to kids, and advance purchase agreements for next year and beyond. We might hear news on all of these fronts in the fourth quarter.
Moderna recently asked the U.S. Food and Drug Administration to authorize a smaller dose of its vaccine as a booster. This would mean those vaccinated with Moderna eventually get three shots instead of just the two-dose primary series. That doesn't immediately put more money in Moderna's coffers. Contracts with the U.S. already include enough doses for everyone. But that's for right now. If many Americans get the Moderna jab and go for a booster, the government probably would order at least the same quantity for the next round of vaccinations -- or possibly more.
The same goes for vaccines for kids. They won't immediately drive revenue higher. But if families opt to vaccinate their kids, the U.S. will use up its stock of Moderna doses quickly. And that could lead to big orders down the road.
Advance purchase agreements
All eyes continue to be on Moderna's announcements of advance purchase agreements for the coming years. Those, too, represent more revenue ahead. Moderna last month said it's signed a supply agreement with Canada for as many as 105 million vaccine doses all the way through 2024.
Any of these elements individually -- or a combination of them -- could drive Moderna shares as high as $500 in the months to come. At that level, they would surpass Wall Street's highest 12-month share price forecast by $15.
So now you might be wondering whether that level is sustainable. A look at Moderna's track record offers us a clue. The stock has managed to generally maintain its gains -- and then move higher.
Why? Because Moderna hasn't disappointed since it entered the coronavirus vaccine race. It's smoothly navigated vaccine development, authorization, manufacturing, and distribution. If Moderna continues along this path with boosters, expanded vaccine use in younger age groups, and supply deals in the months ahead, we may see the same pattern in the stock price.
Of course, all of this doesn't mean Moderna shares will continue at such a pace forever. At a certain point, even amid good news, increases may slow. The stock may even stagnate or trade lower for a while. For instance, Moderna shares fell nearly 5% in yesterday's trading session.
But Moderna has 37 programs in the pipeline. And if even a couple of them follow in the footsteps of the coronavirus vaccine, we could be looking at catalysts to drive the stock progressively higher in the future.
