Moderna (MRNA 1.69%) has lost more than half of its value this year. The bullish investors have largely left, and the stock has plunged to levels it hasn't seen in years. Rival Pfizer has also recently raised concerns about slowing demand for COVID-19 shots as it reduced its guidance for the year. Has Moderna become an attractive contrarian stock to buy right now, or could the stock be heading even lower?

Will Moderna slash its guidance next month?

Moderna became a hot buy over the past few years due to its vaccine for COVID-19. It marked the company's entry onto the big stage, as the healthcare business's valuation soared to more than $100 billion. 

But with concerns relating to COVID now on the back burner and demand no longer strong, the company's future is questionable. This year, Moderna projects between $6 billion and $8 billion in vaccine revenue. And $4 billion of that is already banked due to advance purchase agreements.

That's a sharp decline from the $19.3 billion Moderna reported in revenue for 2022. And the risk is that even its current forecast may be high. Pfizer recently slashed its guidance for the year solely due to declining demand for its COVID products, shaving off $9 billion in the process. 

The challenge is that without the government loading up on vaccines, it's difficult for these companies to forecast what demand will be. And Moderna investors may be anticipating an underwhelming performance when the company releases its third-quarter results next month as a cut to the guidance is a very real possibility.

Is Moderna's pipeline strong enough to weather the storm?

Moderna is working on developing other treatments that could help offset some of the decline in COVID-related revenue. But the problem is that the potential may not be all that high. Here are some of the company's most promising assets:

  • mRNA-1647: a vaccine for cytomegalovirus, which could generate peak sales between $2 billion and $5 billion.
  • mRNA-1345: a vaccine for respiratory syncytial virus, which may bring in over $2 billion in peak annual sales.
  • mRNA-1893: a vaccine for Zika virus that could be worth hundreds of millions of dollars.

A bit of a longer shot is the company's cancer vaccine, mRNA-4157, that it is working on with Merck. While it could be incredibly promising, cancer treatments are notorious for high failure rates in clinical trials and potentially not doing enough to improve survival rates. The vaccine is entering phase 3 trials right now. Getting that far is encouraging, but it's still too early to tell if it will be likely to obtain approval. Analysts project that it could generate $291 million in sales by 2028. But Moderna will only share in the profits with Merck, so this may not be a mammoth opportunity for the business in the long run.

The company will be able to offset some decline in revenue, but at this point, it appears unlikely for it to get back to north of $10 billion anytime soon. And investors should remember that while the peak sales potential may be high for some of these vaccines, it could take years for these products to reach those levels.

Is Moderna's stock truly cheap?

Moderna's valuation can be difficult to gauge. You can't truly rely on earnings on revenue multiples, as the business is going to look a lot different as it transitions to other products. It's currently trading at only 3 times its trailing revenue. But if the company's sales fall further, then that sales multiple will quickly rise. Plus, declining revenue will put pressure on its bottom line. 

In its most recent earnings report, Moderna incurred an operating loss of $1.9 billion for the period ending June 30. A year ago, it posted a profit of $2.4 billion. As its revenue falls, there could be even bigger losses ahead. And should that happen, its already lower valuation could still look expensive.

Should you buy shares of Moderna?

The news of Pfizer slashing its guidance is a likely sign that demand for Moderna's vaccine isn't all that strong, either. Investors are bracing for a worse quarter. And it's probable that there will be even more underwhelming quarters next year as well. The stock was overpriced when euphoria was high surrounding the company's COVID vaccine and now its valuation is coming back down to earth. That's why even though the stock is down more than 50% this year, it may not be easy to make a case to buy shares of Moderna.

Without a product that can consistently deliver strong revenue growth for the business, it'll be difficult to convince risk-averse investors to take a chance on it. Although Moderna is trading near where it was back in 2020, the healthcare stock still isn't worth investing in my view right now as it could still go much lower.