The world-famous vaccine maker Moderna (MRNA 0.35%) will report its third-quarter earnings on Nov. 4 before the market opens, and that means savvy investors are already planning for what to do after getting the new information. In the second quarter, the biotech reported that its quarterly revenue had grown by more than 6,398% year over year, so its Q3 results have a hard act to follow, to say the least.
The key will be how its sales and manufacturing operations will shift in response to the anticipated need to make and deliver booster shots, which the Food and Drug Administration's (FDA) advisory committee recently unanimously voted to support. If the company's financial performance is better than expected, it might push the stock's valuation even further into the danger zone. In contrast, weak results could present a buying opportunity to price-sensitive investors, so let's dive in and analyze which things will matter the most.
Future vaccine sales are critical, but not guaranteed
Given that the coronavirus vaccine is Moderna's only cash cow at the moment, everyone will be keenly watching sales results as well as anything that might impact future income. In particular, any new advance purchase agreements (APAs) from customers will be important because they'll pin the company to delivering doses at a future point in time. This year, Moderna expects to make as much as $20 billion for fulfilling its APAs from 2020. Through 2022 and 2023, it could see another $20 billion -- or perhaps even more, which would imply a higher stock price. On Sept. 24, it signed an APA with Peru to supply 20 million doses in the first quarter of next year. Signing more agreements like that one will lock in revenue and give investors an idea of when to expect it.
But, serving the demand may be an issue. Earlier this year, problems with the supply chain for vaccine components led to delayed delivery of doses to customers who had already paid up. While those problems have been resolved, the ongoing disruption to the global supply chain may cause delays to crop up again, so shareholders should listen carefully to management.
Furthermore, the company expects to make between 2 and 3 billion doses of its jab in 2022, and it's still not clear exactly where the final tally will land within that range. As recently as last month, Moderna was onboarding new manufacturing collaborators. And early this month, it announced that it was planning to spend $500 million on building a new manufacturing facility with an estimated annual output of 500 million doses in a yet-to-be-announced African country.
Getting updates on these scale-up efforts will help determine how many doses it can really sell over the next year. In turn, that'll affect the stock's valuation, which could easily become even more bloated -- or potentially, deflated, if the output is expected to fall beneath prior estimates.
New clinical programs and pipeline updates might not rock the boat
Aside from Moderna's vaccine revenue, its earnings report will likely include updates on a handful of its pipeline programs. Expect to see information on clinical trial enrollments, as well as fresh timelines for projects to advance into the next phase. Of particular importance will be any new details about the company's influenza vaccine or its plans for a combination jab for both coronavirus and the flu. Investors should pay careful attention to the progress in programs with large target markets, like Moderna's personalized cancer vaccine.
Still, pipeline updates probably won't have as big of an impact on the company's stock price. That's largely because many of the non-coronavirus programs in Moderna's pipeline will never have the same revenue-making potential. No matter what, don't expect the Q3 report to make or break this stock. While there will likely be some change in its price as the market digests the new information about APAs and manufacturing capabilities, investors' appraisal of Moderna's health as a business probably won't significantly change for better or for worse.