Moderna Stock (MRNA) Could Keep Delivering Value for Years

Moderna's (MRNA) stock price has almost tripled YTD. The coronavirus pandemic continues to rage and the new Delta variant has increased the virus cases worldwide. There's a renewed need for vaccines world, including the Moderna vaccine. What is Moderna's stock forecast for 2025?

Moderna’s success story started after it got emergency-use authorization for its COVID-19 vaccine, mRNA-1273. In November 2020, the company announced that its mRNA-1273 demonstrated 94.1 percent efficacy and was 100 percent effective at preventing severe COVID-19.

One of the recent stocks catalysts for Moderna has been its addition to the S&P 500. The index fund, whose performance mirrors that of the S&P 500, will have to buy Moderna and this will be a major buy catalyst. After the stock’s recent rise, its NTM PE multiple has gone up to 10.5x from 5.8x at the end of March. Its multiple is higher than its comparable peers but so are its potential positive catalysts.

While investors are concerned about Moderna’s valuation, its growth potential could start to justify its valuations. Its future revenues are expected to be much higher than its current revenues. The company is in the process of securing new sales agreements. On July 12, it signed an agreement with Argentina for 20 million doses and it's expected to begin delivery in the first quarter of 2021.

Along with supply agreements, Moderna is also ramping up its production capacity. In April 2021, the company said that it expects to make up to 3 billion doses in 2022, which is more than twice the previous forecast. The manufacturing expansion is a clear sign that the company sees the COVID-19 vaccine business as an enduring business bet.

The issues highlighted with vaccines from AstraZeneca and Johnson & Johnson also led wealthy governments across the world to bulk up their stocks of Moderna and Pfizer vaccines. One of the major recurring revenue catalysts for Moderna and other COVID-19 vaccine makers will be the need for booster shots to maintain immunity. However, there needs to be more clarity on the official stance regarding the need for booster shots.

Apart from the COVID-19 vaccine, Moderna’s development pipeline is expected to be more mature and robust by 2025. The company has proved the effectiveness of mRNA medicines with the COVID-19 vaccine. This approach could be effective with other vaccines as well.

Moderna also has other promising candidates in its pipeline, which could become its revenue earners apart from the COVID-19 vaccine. Its seasonal influenza vaccine is currently in phase 1/2 clinical trials, which also has the potential to be extremely profitable. The current flu vaccines are only 40 percent–60 percent effective. Moderna’s mRNA approach could increase the effectiveness and reduce the side effects. This could be a big deal if the clinical results are positive. The vaccine’s launch is also critical for Moderna to launch its combination respiratory vaccines.

Moderna’s vision is to create combo vaccines that would target COVID-19 and flu. Such a combo could be a winning combination for Moderna and could keep boosting its sales for years to come.

In November 2020, Moderna CEO Stephane Bancel stated during an interview that the company could end up being the world’s biggest vaccine company three to four years from now. While that statement raised many eyebrows then, it could turn into reality. Moderna's strong long-term prospects make the stock a buy.