Moderna (MRNA 0.89%) became a household name thanks to its quickly produced and approved coronavirus vaccine in 2020. Now that the pandemic is easing, it's reasonable to ask if there's still an investing thesis for the stock.
As it turns out, there are several compelling reasons why this biopharma is a smart long-term play. But no company is perfect, and there are also a few decent arguments for why shareholders should actually be selling Moderna right now.
Let's examine two big points in favor of Moderna stock and one point against buying. Hopefully, these reasons will help you better know how to proceed as an investor.
Reason to buy: Its late-stage clinical programs will find large markets in short order if OK'd
While there's essentially zero chance that any product Moderna commercializes in the next few years will have as large of an addressable market as its coronavirus vaccine, it still has a few programs that could be significant moneymakers and constitute valid reasons for investing. In particular, its vaccines for respiratory syncytial virus (RSV) and influenza, both of which are in phase 3 trials, could be lucrative. Per Research and Markets, the global sales of an RSV jab could be as high as $4.2 billion by 2027. The flu vaccine market is even larger, as it could reach $10.1 billion in annual sales by 2030, according to Allied Market Research.
It's true that Moderna will have competition in both of those markets from giants like Pfizer and GSK even if its programs get regulatory approval. But the competition will largely not be using the latest mRNA technology, as Moderna's will. And that means it could have an advantage in gaining and keeping market share, which is a reason to buy its stock.
Reason to buy: It has oodles of cash to invest in long-term growth
For a biotech, there's nothing better than having a lot of money to spend on stuff like pioneering new pipeline programs, doing more preclinical research, and building additional platform capabilities. Biotech is a risky business, and the more money a company has, the more chances it has to hit a home run -- and the more times it can safely strike out without endangering its future.
On that note, Moderna ended 2022 with a mind-boggling $18.2 billion in cash, equivalents, and investments, and it plans to spend only $4.5 billion on research and development (R&D) in 2023. That means it could continue to spend like wild even if its earnings were to somehow drop to zero, which they won't.
It also means that the company will be able to easily acquire any promising upstarts that management thinks will be useful, not to mention opening the door to direct investments in key suppliers like Maravai LifeSciences if the need arises.
And that's why having a lot of cash is yet another reason to invest.
Reason to sell: Revenue is going to keep crashing for a while
The biggest reason to sell Moderna stock immediately is that pretty much everyone, management included, knows that the company is going to make less money in 2023 than it did in 2022, and 2024 will almost certainly see a further shrinking of its top line. Wall Street analysts expect its $18.8 billion of total revenue in 2022 to collapse to around $7.6 billion this year, and then a year later, to around $6.5 billion.
But even those estimates may be too rosy. For the first half of the year, management is only predicting $2 billion in sales, and it claims that it has a total of $5 billion worth of coronavirus vaccines queued for delivery before 2024. That means the days of Moderna's stock flying skyward are over, at least for a while.
