You might think that investors would love Moderna (MRNA 1.69%) based on its business performance. The company reported $4.7 billion in revenue for the second quarter of 2022. Nearly half of that amount -- $2.2 billion -- was profit.
Moderna's cash position topped $18 billion at the end of Q2. It's on track to sell $21 billion of its COVID-19 vaccines this year. The company also continues to pick up authorizations and approvals across the world for its new vaccine targeting the coronavirus omicron variant.
But all isn't well for the vaccine leader. Here's one picture that sums up Moderna's biggest problem:
Image source: Centers for Disease Control and Prevention.
A complicated -- and concerning -- picture
The above picture from the Centers for Disease Control and Prevention (CDC) is admittedly somewhat complicated. That's because the picture displays eight charts for different age ranges. And each of those charts shows two distinct trends.
The dotted lines on each chart depict the seven-day average of new COVID-19 cases per 100,000 population in the U.S. so far in 2022. The solid lines on each chart show the percentage of people in the U.S. who are fully vaccinated during the same time period.
Regardless of the age range, two things are clear from the charts. First, the number of COVID-19 cases per 100,000 is declining quite a bit. Second, the number of fully vaccinated individuals in the U.S. has essentially flatlined.
Obviously, lower numbers of COVID-19 cases are great for the U.S. However, they can reduce the sense of urgency for Americans to be vaccinated. This results in lower demand for Moderna's COVID-19 vaccines. The vaccination trends appear to confirm that the demand is waning.
While Moderna's financial results don't show any major problems, its stock chart does. The vaccine stock is down more than 40% year to date and is close to 70% below the peak level set in the summer of 2021.
Getting a boost from boosters?
Investors fully realize that Moderna's revenue and earnings will almost certainly nosedive in the near future unless the demand for its COVID-19 vaccines rebounds. The most likely way for that rebound to happen is with the company's omicron boosters.
Another COVID-19 wave could be in store. Indeed, the White House warned several months ago that as many as 100 million infections in the U.S. could occur during the fall and winter season.
Moderna's omicron booster holds the potential to be more effective at providing protection against omicron sub-variants. Individuals in the U.S. and in other countries could be more eager to receive the new booster if there's a significant increase in COVID-19 cases.
However, even Moderna appears to recognize that its market will decline going forward. The company recently stated that it thinks the U.S. COVID-19 vaccine market after the pandemic ends could be as much as $13 billion. This estimate assumes a vaccination rate of around 50% and a price of $100 per dose. While the global market would be larger, many countries would be less likely to pay as much per dose.
Moderna won't have this market to itself. Pfizer and BioNTech currently hold a greater COVID-19 vaccine market share in the U.S. than Moderna does. Novavax could also become a more formidable competitor with its protein sub-unit vaccine.
The bigger picture
The uncertainties with ongoing COVID-19 vaccine demand make Moderna an iffy proposition at best right now. However, there's a bigger picture for Moderna that could still be attractive to some long-term investors.
Moderna's pipeline includes late-stage vaccine candidates targeting three other viruses other than the novel coronavirus -- flu, cytomegalovirus (CMV), and respiratory syncytial virus (RSV). All three of these could present significant market opportunities for the company. Moderna is also evaluating multiple programs in earlier-stage testing that could open up new markets.
