Since the debut of its white-hot coronavirus vaccine, Moderna (MRNA -0.09%) has been an insanely good stock to own. If someone had purchased its stock in the middle of March of 2020, their investment would be up more than 534%. Unfortunately, if they'd tried the same investment six months ago, they'd be down by just over 60%.

The secret is that Moderna's business hasn't fundamentally changed, and it's still a company that's capable of developing world-changing medicines. So it's still a stock that could be a great pick for the right portfolio -- and now that it's down from its heights, it might even be selling at a discount. Let's compare its valuation to a few of its peers and figure out if there's a compelling reason to buy.

An investor looks overwhelmed while sitting in front of two computers displaying stock data in a home office.

Image source: Getty Images.

Valuations can be deceptive

The trick to figuring out whether a stock is cheap or expensive is to make sure to compare its value to the appropriate standard.

Moderna's price-to-earnings (P/E) ratio rests at 9.4, which is much lower than the biotechnology industry's average of nearly 22. That means its shares are cheaper per dollar of net income.

Moderna's P/E is also a much lower multiple than those of much larger and more diversified competitors in the coronavirus vaccine space, like Pfizer, AstraZeneca, and Johnson & Johnson:

MRNA PE Ratio Chart

MRNA PE Ratio data by YCharts.

At first glance, this stock looks like a bargain.

But the three companies named earlier are pharma giants, not biotechs with a single product on the market like Moderna, so it shouldn't be surprising that the market has higher expectations for their growth. The smallest of the group, AstraZeneca, has trailing-12-month revenue in excess of $32.8 billion, while Moderna only brought in $11.8 billion during the same period.

A better comparator (also on the chart) is BioNTech (BNTX 1.13%), which also only has one source of recurring revenue, the coronavirus vaccine called Comirnaty, which it developed in conjunction with Pfizer. BioNTech's P/E ratio is only around 4.4, and its share of the profits from Comirnaty leaves it with a trailing net income of $8.9 billion, which is significantly more than Moderna's sum of $7 billion. Moderna is an expensive stock compared to BioNTech, even if it's inexpensive in the context of vaccine stocks or biotech stocks in general.

Is it still a buy?

Investors shouldn't be scared away from a stock just because its valuation isn't perfect, especially if there's a reasonable expectation for significant growth. And that's exactly the situation with Moderna.

While I can't give any guarantees that its stock will stop falling anytime soon, there are indeed a couple of catalysts that could interrupt the downtrend and pave the way for more profits.

In particular, 2022 is likely to be a larger year for coronavirus vaccine sales than 2021, with the business predicting at least $18.5 billion in revenue from already-signed advance-purchase agreements. Some of those advance-purchase agreements also have the option for buyers to upsize their orders, which could yield as much as $3.5 billion in additional income. Buyers who exercise their options to purchase more doses thus make it likely that the company can surprise the market by beating consensus expectations for its quarterly earnings.

Aside from that, investors may be interested in Moderna's long-term prospects, which rest in its drug development pipeline of around 40 projects. Of those programs, the one that's likely to be the biggest moneymaker in the near term is its combination influenza and coronavirus vaccine, which is still in mid-stage clinical trials. Given that the market for seasonal influenza vaccines is projected by Allied Market Research to reach $10.1 billion by 2030, moving closer toward commercializing a candidate will be quite favorable for Moderna, even if it can only capture a small slice of the market.

In my view, buying Moderna today is a good idea, but it's important to recognize that new shareholders might need to wait a while for the stock's fortunes to reverse.