Moderna (MRNA 0.17%) has become one of the most talked-about companies on the planet. That's because the biotech went from zero product revenue to billions thanks to its very first product: the coronavirus vaccine. Those who invested early benefited as the stock climbed.
But Moderna shares haven't delivered in recent times. That's as some investors worry about the company's post-pandemic revenue. So, is it time to forget about Moderna and move on to other biotech players? Or is Moderna still a hot stock to add to your portfolio? Let's check out the bear and bull cases.
The bear case
Moderna's coronavirus vaccine generated more than $17 billion in annual revenue over the past two years. But that's about to change. The company this year only expects $5 billion in product revenue according to contracts signed so far. Of course, this could move higher. But considering we're heading toward a post-pandemic environment, I wouldn't expect a major increase.
This significant drop in revenue could weigh heavily on demand for Moderna shares. Yes, the company has other programs in the pipeline. But none of them, alone, will produce the level of revenue the vaccine generated in recent times.
And this means it will take a while for Moderna to return to the revenue levels investors have gotten used to seeing.
It's also very hard to value Moderna's shares right now. That's because there is uncertainty about how much the vaccine will generate annually in the coming years -- and how much Moderna will make from other potential products.
All of this means some investors may hesitate to buy Moderna stock today -- and wait for more visibility.
The bull case
It's true the picture isn't crystal clear right now. But we do have some elements that offer us reason to be optimistic about Moderna's future.
First, Moderna and rival Pfizer predict the coronavirus vaccine market will follow that of the flu market. That implies about half of the U.S. population may go for annual boosters. This won't result in the same levels of revenue we saw in the earlier days of the pandemic. But it still could lead to recurrent blockbuster revenue. And a high level of revenue that comes in year after year is definitely something to like.
Next, Moderna probably won't be a one-product company for long. The biotech plans on asking for regulatory approval of its respiratory syncytial virus (RSV) vaccine in the first half of this year. If all goes well, the product could launch later this year or in early 2024. The older adult RSV market is worth more than $10 billion. So even with the possibility of two other rivals on the market, Moderna could be very successful here.
Moderna also has two other non-coronavirus candidates in phase 3 trials and more than 40 programs in development -- these represent catalysts in the near term and over the long term.
Bear or Bull?
So, should you buy Moderna stock or look for other opportunities? It's true Moderna has reached a transition point. Growth clearly will slow this year compared to last year. But it's difficult to compare sales during ordinary times to sales during a pandemic.
It's a better idea to take a look at Moderna's vaccine sales this year or next year -- and use that as a new comparison point for the future. It's reasonable to imagine that we will see growth from these new starting points. That's with the idea that the coronavirus vaccine market follows that of the flu, which is a logical prediction.
There's also reason to be optimistic about Moderna's pipeline and the company's ability to fund it -- thanks to vaccine sales. Even a couple of launches in the next few years could equal significant revenue growth.
Now let's consider the share price. Moderna has been trading around the same levels for more than a year. Any worries about vaccine revenue declines could be priced in to the shares right now. That means potential product approvals and revenue growth ahead could push the shares higher. And that's why right now looks like a better time to be bullish on Moderna than bearish.
