Shares of Moderna Inc. (NASDAQ: MRNA) were up 6% on Monday. The stock has gained 291% since the beginning of the year and 149% over the past three months. Moderna’s success has been fueled by its COVID-19 vaccine and this momentum is likely to continue for the near term. Here are a few factors to note when looking at this stock:
Moderna has generated strong revenue and profits from its COVID-19 vaccine and this trend can be expected to remain stable at least in the near term. The company posted revenue of $4.4 billion in the second quarter of 2021, of which $4.2 billion came from its COVID-19 vaccine. Net income totaled $2.8 billion in Q2.
Moderna anticipates $20 billion in product sales for 2021 and the company has signed advance purchase agreements (APAs) for product sales of approx. $12 billion and options of around $8 billion for 2022. It is also signing APAs for 2023. The company expects to supply 800 million to 1 billion doses in 2021 and 2-3 billion doses in 2022.
The occasional resurgence in COVID-19 cases and the appearance of several variants of the virus have fueled the demand for vaccines and booster shots. Earlier this month, Moderna released data showing that its vaccine was effective against many of the existing COVID variants. This provides additional opportunities for the company.
However, as mentioned above, Moderna generates almost all its revenue from the COVID-19 vaccine and this dependency is a risk. The company needs additional revenue streams to drive growth going forward. There are also several players in the vaccine market which increases the competition and companies like Johnson & Johnson (NYSE: JNJ) which provide convenient options like single-dose vaccines could prove to be formidable opponents.
Moderna has a strong pipeline of products that it is currently working on, which include vaccines for flu, Zika, HIV, Nipah and even cancer. This is a promising line-up which is expected to open up significant revenue and growth opportunities for the company. However, the process of successfully developing and gaining approval for each product is difficult and time-consuming and this could lead to further costs which in turn could weigh on profits.
In the near term, Moderna’s prospects appear bright but the company does have its fair share of risks. According to TipRanks, the majority of analysts have given the stock a Hold rating while some have rated it as Buy. The average 12-month price target stands at $276.45, which reflects a 32% downside from the current level.
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