Moderna (MRNA 3.23%) hit a home run with its first-quarter results. The company's Q1 revenue of $6.1 billion blew past the Wall Street estimate of $4.6 billion. It posted earnings per share of $8.58 -- trouncing the consensus view of $5.21 per share.
It looks like 2022 is shaping up to be an even stronger year for Moderna than 2021. The company reaffirmed its full-year revenue guidance of $21 billion. Analysts think the actual total could be higher, with an average estimate of a little over $22 billion.
But those numbers could prove to be overly optimistic. Here's why Moderna might make less money this year than everyone expects.
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Simple math in Q2
Moderna appears to definitely be headed for less impressive results in the second quarter. It acknowledged as much, both in the Q1 press release and earnings conference call.
The company stated that it "believes that COVID market dynamics will result in sales slightly larger in the second half of 2022 than in the first half." Using Moderna's full-year revenue guidance of $21 billion, this means that the vaccine maker should make less than $10.5 billion (half of the 2022 projected outlook) in the first half of this year.
Moderna reported revenue of $6.1 billion in the first quarter. Only simple math is required to conclude that the company should make no more than $4.4 billion in Q2.
Outgoing CFO David Meline confirmed this in the Q1 call, saying that "the math would then point to the second quarter being likely the lowest that we'll see throughout the year." Unsurprisingly, the average analyst's revenue estimate for the second quarter is $4.2 billion.
Revenue at risk
However, a weaker Q2 isn't the reason why Moderna might make less money in 2022 than expected. There's another factor at play.
In speaking about the full-year revenue guidance of $21 billion, Meline acknowledged in the earnings call, "There's a potential downside to this number from timing of COVAX deliveries if COVAX is unable to confirm demand aligned to their contracted volume in the 2022 calendar year." He noted later in the call that COVAX has already chosen not to exercise options to purchase additional doses this year.
COVAX, which stands for COVID-19 Vaccines Global Access, is an initiative sponsored by several organizations, including the World Health Organization. Its goal is to ensure access to COVID-19 vaccines across the world.
Moderna has a contract for 2022 in place with COVAX. However, the organization must still coordinate with individual countries on any vaccine orders. Because there's currently a supply glut of vaccine doses, it's quite possible that countries won't need any additional doses from COVAX. If so, Moderna's full-year revenue guidance could be in jeopardy.
On the other hand, Moderna also has the potential to make even more revenue than expected this year. Its guidance doesn't include any U.S. orders. CEO Stéphane Bancel stated that Moderna is "working toward assuming that there's no government order." However, even if the U.S. government doesn't purchase additional doses, private payers could -- and probably at higher prices.
Beyond 2022
The more important question for Moderna relates to what's in store beyond 2022. The vaccine stock is more than 70% below its 52-week high, in large part because of this uncertainty.
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Key Data Points
Moderna itself seems to acknowledge that the future COVID-19 vaccine market could be smaller in the future. Management's discussion about the potential for annual boosters focused only on high-risk individuals, rather than the full population.
However, Moderna's prospects aren't completely tied to COVID-19. The company should soon have four late-stage vaccine candidates, three of which target other respiratory viruses. Bancel thinks that each of these candidates "could have multibillion-dollar annual peak sales."
Perhaps the best news for Moderna is that it ended the first quarter with a cash stockpile of $19.3 billion. Whether or not the company makes $21 billion in revenue this year won't matter when it comes to funding clinical development.
