CEOs are known for giving rosy outlooks for the future. And when that doesn't happen, it should raise some serious red flags. Recently, Moderna (MRNA 2.47%)'s CEO highlighted a big risk for the company: Demand for its COVID-19 vaccine is going to crater. It's a big enough decline to get investors worried.

Demand to drop by 90%

Moderna is anticipating a big drop in demand this year as concerns around COVID-19 subside. It's a big reason why the healthcare stock trades at a lowly eight times earnings -- investors know that earnings will take a hit this year. One way Moderna plans to offset some of the decline in demand is by raising the price of its vaccine to $130 per dose. Previously, the company was selling its doses for less than $30 to the U.S. government.

The purchases will now come from the private sector, and so volumes will be lower. But just how much lower is what might surprise investors. "We're expecting a 90% reduction in demand" is what CEO Stéphane Bancel told U.S. senators at a hearing this month to defend the company's price hike.

Moderna's future COVID sales could be bleak

Moderna is forecasting $5 billion in revenue from its COVID-19 vaccine this year, which will be generated by advanced purchased agreements that it has contracted already. That's a roughly 73% decline in sales from last year's tally of $18.4 billion. There's room for new sales and agreements to be made, but that doesn't appear to be in the forecast as of now.

This means that future revenue beyond 2023 could be much worse. A 90% decline in revenue from last year would put the company's COVID sales at just $1.8 billion. If Moderna were to truly fetch a price of potentially more than four times what it was charging in the past for its doses, then it could get the revenue number above $7 billion. But that could be too optimistic given a couple of factors.

The first is that companies in the private sector may not be willing to fork over an inflated price for the doses. Many businesses have been scaling back spending due to inflation and fears of a recession. Securing COVID-19 vaccines and boosters may simply not be enough of a priority.

Secondly, demand may be lower than Bancel is projecting, as there are signs that people are no longer concerned about COVID-19. Ipsos has a monthly "What Worries the World" survey, and according to March's edition, concerns about COVID-19 are the lowest they've been since the survey began in April 2020. It ranks 16th out of a list of 18 worries; inflation is the most concerning issuing these days.

The business does have opportunities, but it could take a while for them to pay off

Moderna's pipeline isn't bare, and there's the potential the company does make up some lost revenue, but it could take some time for that to happen. It's working on a personalized cancer vaccine with Merck that, if it's approved for multiple cancers, could top $5 billion in peak annual sales. But the profits of that would be shared between the two companies. It may also be able to generate $5 billion in peak annual revenue from mRNA-1647, which is a vaccine for the cytomegalovirus. Another $2 billion may come from mRNA-1345, which treats the respiratory syncytial virus.

If approved, it could still take many years for these vaccines to hit their peaks -- assuming they do at all. These won't be the cash cows that the COVID-19 vaccine has been. Moving forward, Moderna is going to be a riskier investment to own. Meanwhile, it's planning to add 2,000 employees to help develop new products. That, in turn, is going to raise its costs, which will make it even more difficult for the company to stay out of the red.

Moderna's stock price doesn't reflect these risks

If Moderna's revenue tops $5 billion this year, that would put its valuation at a hefty 12 times revenue based on its share price today. If the company underwhelms and falls short of that forecast, the multiple will be even higher and look worse.

Although it's down more than 30% from its 52-week high, this still looks like an overpriced stock, as it's hard to justify paying a premium for a business that is probably going to see its revenue decline even further in 2024. Investors should be demanding more of a discount for the stock.