While COVID-19 invoked economic and social hardships, the pandemic has also helped fuel some of the most impressive technological and scientific developments of our time. In 2020, Moderna (MRNA -0.58%) was granted Emergency Use Authorization for its coronavirus vaccine, and the stock increased by over 430% as positive news swirled over the jab's revolutionary mRNA technology. The company benefited financially from commercialization, and investors were rewarded with an additional stock price increase of over 120% in 2021. As we head into 2022 with a new variant, dubbed omicron, let's dig in to see if now is a good time to buy Moderna stock.
What's the deal with the omicron variant?
Since it was first detected in late November, the omicron variant has become the leading COVID strain in the U.S. According to data published by the Centers for Disease Control and Prevention (CDC), omicron now represents over 70% of new infections.
As Moderna's vaccine became more readily available and society began to experience its reopening, a number of organizations and private businesses required vaccination in order to enter. As of the end of July, 50% of the U.S. population was fully vaccinated against COVID-19. Three months later, the portion of fully vaccinated people increased to 58% by the end of October. As of Dec. 2021, approximately 60% of all Americans were fully vaccinated, and 21% of fully vaccinated Americans had received a booster shot. Although the swift rise in cases is certainly cause for concern, it could be argued that the omicron variant has also helped fuel an increase in vaccination rates.
According to the CDC's vaccination tracker, over 73 million Americans have received Moderna's vaccine and nearly 31 million people have received its booster. Early research has indicated that vaccines are significantly less effective against omicron without a booster. Moreover, antibodies in people who received two doses of Moderna's vaccine but not a booster were 50 times less effective against the omicron variant.
A recent study published in the U.K. found that protection against omicron decreased to just 10% within 20 weeks after a second dose of Moderna's vaccine. With a third booster, however, protection increased back up to 90%. The report also made a compelling case for Moderna's booster over other options. According to the study, protection against omicron was stronger in patients that received Moderna's booster after receiving Pfizer's vaccine, compared with those who received a third dose of Pfizer.
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What is the financial impact of the vaccine?
Although it is difficult to gauge the potential for additional strains after omicron or whether annual booster shots will be recommended by the CDC, the U.S. and the global community still have a long road ahead in terms of increasing vaccination rates. Despite competition from Pfizer and Johnson & Johnson, commercialization of the vaccine has already had a significant impact on Moderna's financials. If the disease becomes endemic, Moderna's vaccine should continue to serve as a lucrative revenue generator for the company going forward.
Investors can see the impact that the vaccine had on Moderna's business from its latest quarterly financial results. For the quarter ended Sept. 30, 2021, Moderna reported revenue of $5 billion compared to $157 million for the same period in 2020. Total revenue was $11.3 billion through the first nine months of 2021 compared to $232 million for the same period the prior year. The hyperbolic increase in revenue was largely due to commercialized sales of the company's COVID-19 vaccine.
Even more impressive is Moderna's profitability profile. The company reported net income of $3.3 billion for the quarter ended Sept. 30, 2021, compared to a net loss of $233 million for the same period in 2020. Net income was $7.3 billion for the nine months ended Sept. 30, 2021, compared to a net loss of $474 million during the same period in 2020. These profits have helped the company bolster its cash position, which sat at $15.3 billion as of Sept. 30, 2021. Increased profits can help Moderna invest in future clinical studies which could lead to further scientific breakthroughs or additional honing to existing medications, such as its COVID-19 vaccine.
Now what?
Moderna was not immune to the broader market pullbacks in November and December that affected high-flying tech stocks. Even if omicron wanes in 2022, there are possibilities for new strains or that the disease becomes endemic. In either scenario, Moderna is poised to benefit from any future administrations of its vaccine.
As of the time of this writing, Moderna has fallen over 50% from its 52-week in August 2021, equating to more than $98 billion of market capitalization being erased. At roughly nine times its trailing-12-month sales and a healthy profitability and cash profile, Moderna looks like a good buy going into 2022.
