Shares of Moderna (MRNA 0.98%) have fluctuated wildly depending on the prospects of the company's COVID-19 vaccine. However, with COVID cases still on the rise due to the latest variant, omicron, the biotech's booster shots could witness accelerated demand. In fact, a recent study's findings could potentially make Moderna the preferred booster shot provider for a large section of the population.
Early investors in the Cambridge, MA-based company have experienced a roller-coaster ride with respect to its shares' price action. However, they've also understood the fundamental driving force behind the business' rise from a market capitalization of less than $7 billion at the start of 2020 to now being worth about 17 times that amount. As of writing, Moderna is now worth a mind-boggling $119 billion.
Even better, the biotech's valuation could continue to rise as 2022 could prove to be another solid year with the study's findings becoming a massive tailwind to the business.
A new study shows Moderna's vaccine may be the optimal booster
Researchers at the University of Oxford released the results of a study this month that looked at various scenarios involving the mixing and matching of vaccines. It involved 1,070 volunteers, and among the more interesting findings was that in some cases, mixing and matching was more effective than taking the same dose. Antibodies were higher, as were T-cell responses, when patients received one dose of AstraZeneca's vaccine followed by a Moderna shot, rather than both doses being from AstraZeneca. Surprisingly, even a Pfizer and Moderna combination was better than two doses of Pfizer.
In October, the Centers for Disease Control and Prevention announced it was allowing mixing and matching of booster shots in the U.S., and that people did not need to get the same vaccine they received previously. Other parts of the world, including Europe, are also in favor of mixing and matching vaccines.
These are positive developments for Moderna, and could set the company up for a solid performance in 2022.
Could Moderna outperform next year?
This year, Moderna expects to generate as much as $18 billion in sales from its COVID vaccine. That's not bad given that in 2020, its top line came in at just $803 million. For 2022, the company projects that its revenue will be within a range of $17 billion and $22 billion.
And that was based on an estimate before the omicron variant and before Pfizer CEO Albert Bourla said that a fourth booster shot may be necessary sooner than expected (previously he was projecting that an additional booster would be needed 12 months after a third shot).
Depending on how serious the omicron variant turns out to be, it's possible a fourth booster shot could happen sometime next year. For a top vaccine maker like Moderna, that would likely lead to an increase in demand. And even if it doesn't necessarily translate into additional revenue for 2022, just the mere expectation of more growth on the horizon could be enough to send its shares higher.
Is Moderna a buy?
The last month has been volatile for Moderna. When news of omicron broke, shares jumped to more than $376 in late November, the highest they had been in months. But then, as reports came in that the variant is potentially mild and not a serious concern, the healthcare stock proceeded to fall and is now back to around $280.
Moderna is a volatile holding, and the risk is that its shares can move quickly based on COVID-related news. There is potential for the stock to still be a top performer in 2022, but there's uncertainty beyond that and with what the pandemic will look like in later years.
And with the company's flu vaccine underwhelming in its initial results, showing to be no better than what's already on the market, Moderna's pipeline isn't looking all that great right now. Its vaccine candidate for the cytomegalovirus is promising and in phase 3 trials, but at its peak, it may generate just $5 billion in revenue -- nowhere near making up for a loss in COVID revenue down the road.
The uncertainty ahead makes Moderna a stock I would avoid, as there are too many question marks in its future. But if you have a high risk tolerance, this could make for an attractive contrarian bet over the next few years.