Moderna (MRNA 2.37%) was a top stock to own during the early stages of the pandemic. The COVID-19 vaccine maker reached a market cap of nearly $200 billion at its peak in 2021. But nowadays, with revenue from its vaccine diminishing and no longer being a strong growth catalyst, investors have become bearish on the healthcare stock. Since 2022, shares of Moderna have fallen by more than 60%.
But all hope isn't lost for the business. The company has been working on its pipeline and developing new drugs. What might the business look like in five years, and is the stock worth buying and hanging onto until then?
NASDAQ: MRNA
Key Data Points
Investors shouldn't expect much COVID-related revenue
It has been around four years since COVID crashed the stock market, albeit temporarily. The pandemic sent the healthcare industry into a panic, with vaccines from Moderna and Pfizer providing relief and stability to global economies. But odds are that in five years, COVID vaccine revenue will be minimal at best for Moderna.
The company just released its latest results and revenue totaled $6.8 billion for 2023, coming mainly from its COVID vaccine. That's down sharply from the $19.3 billion in sales Moderna recorded in 2022.
Moderna is projecting $4 billion in revenue this year, which factors in approval of its respiratory syncytial virus (RSV) vaccine, which the company anticipates should come within the first half of the year. The company is still working on a combination shot for COVID and the flu, which looks to still be part of its long-term strategy.
But with Moderna scaling back its COVID operations and demand for the shots likely being lower in the future, I would be surprised if this were still a major source of revenue for the business in five years. If it is still relying on COVID revenue, that could be a bad sign, indicating that the company hasn't come out with more promising products along the way.
Moderna's operations will likely be broader
Expanding beyond COVID is going to be key to Moderna stock being a good long-term investment. The company does have products in its pipeline that could be blockbusters, including its RSV vaccine (peak sales of up to $2.1 billion) and its vaccine for the cytomegalovirus (potentially $5 billion at its peak). But it will take years for sales from those products, assuming they obtain approval, to flow through to the business.
In the meantime, the company is also working on developing other products, such as mRNA-3927, which is a treatment for propionic acidemia (an organic acid disorder). Its most promising product may be the personalized cancer vaccine it is working on with Merck, which is currently in phase 3 trials. It could potentially treat multiple cancers, including non-small cell lung cancer, melanoma, and other types of tumors.
Is Moderna's stock a good buy today?
Moderna has a lot of trials going on and may have a lot of potential sources of revenue in the future. But this isn't a stock I'd buy today as there isn't anything terribly exciting in its pipeline outside of its personalized cancer vaccine. If that proves to be a winner, the stock could surge. But flu vaccines, COVID shots, and RSV vaccines may not be enough to make the business profitable in the long run.
Even at a reduced market cap of $36 billion, investors would be paying a big premium for the healthcare stock, which is why I expect Moderna's value to decline over the next five years.
