Moderna (MRNA 0.89%) has been one of the hottest growth stocks since the pandemic started. It went from being unknown to being a household name familiar to people all over the world. Even though it has declined in recent months, the stock is still up more than 700% since the start of 2020. At its peak, its gains hit highs of over 2,000%.
Today, however, it faces new challenges. COVID-19 is becoming less of a concern for the public, and the economy is attempting to get back to normal. Is it too late to invest in the stock, or can it still be a millionaire-maker investment?
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Could a new flu + COVID-19 vaccine drive consistent revenue growth?
Health officials are still administering COVID-19 vaccines today, and with a fourth shot now available for immunocompromised individuals and people over 50, there will be plenty of future revenue for Moderna around the corner. The most promising option in the long term is the potential for a combination vaccine for protection against the flu and COVID-19. Pfizer (PFE -0.19%) CEO Albert Bourla has suggested that an annual COVID-19 shot might make more sense than recurring booster shots.
In its current pipeline, Moderna has a vaccine that combines mRNA-1273, its COVID vaccine, with mRNA-1010, its flu vaccine. But that is still in its initial stages and could be a long way from becoming a reality. Notably, mRNA-1010 has been running into problems. The latest data from a phase 2 study showed that mRNA-1010 was associated with twice more side effects than Afluria, the flu vaccine marketed by CSL that was used as the control in the trial.
Whether it's tied to a flu vaccine or not, continued sales of Moderna's COVID-19 vaccine appears to be the best chance for the healthcare company to continue generating revenue anywhere near its current levels. This year, Moderna projects COVID-19 vaccine sales to top $21 billion. Outside of COVID-19, one of the company's most promising vaccines is for the cytomegalovirus, which is in phase 3 trials. If that's successful, it could generate between $2 billion and $5 billion in annual sales at its peak.
How high do analysts think the stock could go from here?
Currently Moderna's stock trades at a forward price-to-earnings multiple of less than six. For comparison, Pfizer shares are trading just above seven times the company's future profits. The takeaway? Investors seem unwilling to pay a premium for a healthcare stock that faces so much uncertainty.
Since February, multiple brokerages have reevaluated their expectations for Moderna. Analysts set price targets to illustrate where they see a stock going, typically in a period of two years or less. An increasing number of analysts feel that Moderna has not given them much reason to remain bullish on its near-term future. While some have stuck with price targets of more than $200, others analysts are doubtful: SVB Leerink, for one, expects Moderna's price to fall to as low as $80.
According to analysts from Research and Markets, the mRNA vaccines and therapeutics market could rise at a compounded annual growth rate of 13% through 2026. Moderna, which is currently one of the top names in mRNA, could be in a position to benefit from that growth. But it first needs to get another product to market, and work to replace all the revenue that it stands to lose in a post-pandemic world. And it's simply nowhere near that right now.
Unless there's a new COVID-19 variant that leads to a significant increase in demand for Moderna's vaccine, it looks unlikely that this healthcare stock could so much as double in value within the foreseeable future -- a decline in share price is much more plausible. Things could always change in the long term, but at this point, investors who are searching for significant growth potential are better off looking elsewhere and finding stocks with much more promising growth opportunities.
