Moderna (MRNA 0.17%) has brought investors great returns -- if you bought the stock in the early days of the pandemic or before that point. In recent times, though, the shares have lost some of those gains. And they're struggling to take off again.
Why? Moderna's reliance on its coronavirus vaccine for revenue has worried some investors. The company has generated more than $17 billion in product sales annually over the past two years. Now, with vaccine demand declining, the picture may look dark. But before you turn your back on Moderna, consider the company's recent prediction. It may shift your view of Moderna from negative to positive.
Programs in development
Moderna held a vaccine day last week, offering updates on its pipeline of candidates. The company has more than 40 programs in the pipeline across indications. These are in various stages of development.
As investors, right now, we're most interested in knowing what potential products may make up for declines in coronavirus vaccine sales. After all, Moderna generated enormous levels of revenue due to a unique situation: a pandemic. Yes, the company is set to continue bringing in blockbuster revenue from its vaccine and booster -- but it won't replicate the levels seen during the health crisis.
So, what represents the next growth driver for Moderna? Respiratory virus vaccines. By this, I mean the current coronavirus vaccine and booster along with vaccine candidates for respiratory syncytial virus (RSV) and flu. Moderna also is working on combined vaccine candidates, potentially offering protection against flu and coronavirus, for example.
Now, here's the prediction that may change your opinion about Moderna. And it comes from the company itself. Moderna estimates that sales of respiratory virus products will total $8 billion to $15 billion in 2027. And respiratory operating profit will settle in the range of $4 billion to $9 billion. This brings it close to its peak coronavirus vaccine performance.
MRNA Operating Income (Annual) data by YCharts
Multiple products instead of just one
It's actually good news that Moderna could generate this level of earnings from multiple products rather than just one. It's always more of a risk to depend on only one product. And one product serving a pandemic is even riskier. So Moderna's 2027 earnings picture, built on a portfolio of products, looks like a more balanced one than the one of the past couple of years.
It's important to remember Moderna's forecast includes the respiratory vaccine products only. So Moderna's total earnings could come in higher than these levels if other candidates win approval. For example, Moderna has a cytomegalovirus vaccine (CMV) candidate in phase 3 trials right now. CMV represents a $2 billion to $5 billion market.
So, what does all of this mean for you as an investor today? Moderna shares probably won't deliver huge returns immediately. The company is at a transition point right now. Coronavirus vaccine revenue this year is set to come in much lower than what we've seen in the past. And it will take a few years for Moderna to launch other respiratory products -- and grow its annual coronavirus booster program.
But for investors who have patience, now looks like a great time to buy the stock. Let's consider the share price when revenue and operating income reached their peak. It's fallen significantly from that level.
MRNA Operating Income (Annual) data by YCharts
Even if the price doesn't return to its record high, it still should appreciate considerably if the company's earnings approach past levels. And that's why today's price represents a great entry point for long-term investors.
No, Moderna shares may not soar in a short period of time like they did in the past. But they still have plenty of potential to advance over time -- and growth of a portfolio of products could help them maintain the gains. So, if Moderna's prediction is right, the company may be looking at a whole new era of growth. And today, you can pick up the stock on sale. That's a great reason to be optimistic about Moderna shares.
