Moderna (NASDAQ:MRNA) stock is down 3.8% in one month. That’s not surprising. Bulls are booking profits after a massive year for the biotech company. Shares are still up 94.5% in the last three months, though. Hence, the fall in Moderna stock has more to do with technical selling pressure than its outlook.
But will the pullback continue through the first quarter? All signs point to yes. Now that more vaccines are coming to the market at a better price point, attention will need to turn towards Moderna’s other mRNA therapeutics & vaccines. A sustainable income stream through a diversified product portfolio is the need of the hour. Until that happens, don’t expect Moderna to maintain its 2020 gains.
Moderna Stock: Victim of Its Own Success
Moderna debuted on Nasdaq at $22 a pop in December 2018. Ahead of its vaccine release, shares changed hands for $178.50. That kind of price movement shows you how much the markets value a novel coronavirus pandemic solution.
Vaccines are rolling out in the U.S., and the company has contracts to distribute the vaccines worldwide. However, in the long run, the impact of the Covid-19 vaccine is likely to be temporary. The next two years will boost top-line growth, but investors need a long-term story that they can latch onto. Otherwise, the stock becomes a one-trick pony like several other biotechs.
To avoid that situation, vaccines for cytomegalovirus, influenza, and respiratory syncytial virus have to take center stage. That’s not to say Covid-19 vaccine sales won’t be healthy, just that they will become less of a factor with each passing year if estimates are anything to go by; $23.1 billion in 2022, $12.6 billion in 2023, and $8.5 billion in 2024.
Building Out Capacity
In the last section, we discussed how Moderna needs to start preparing for the future. However, in the meantime, Covid-19 will continue to dominate its operations. Moderna has boosted the low-end of its global production estimate from 500 million doses to 600 million doses in 2021. Nevertheless, this doesn’t hold a candle to Pfizer (NYSE:PFE) and BioNTech (NASDAQ:BNTX), who plan to produce 2 billion doses of their Covid-19 vaccine this year, raising previously expected output by over 50% in response to surging global demand. That’s not surprising. Pfizer is a juggernaut, and it can easily scale up production to match demand.
I also want to take this moment to discuss the price of Moderna’s vaccine. Although it changes on a case-by-case basis, the vaccine is priced between $25 to $37 per dose. AstraZeneca (NASDAQ:AZN) vaccine is expected to be priced as low as $4. Meanwhile, Pfizer is charging governments between $10 and $50 per dose. However, considering its ramping up production, expect that price point to fall quite considerably moving forward.
Moderna does have a leg up on the competition. Its vaccine is emerging as the most sought-after due to its 94.1% efficacy rate and the fact that it can be stored at refrigerator-like temperatures for 30 days, unlike Pfizer’s vaccine, which demands much colder temperatures of around -94 degrees Fahrenheit – limiting usefulness in emerging markets.
The Long Term Story Is There but Wait for a Better Price
It seems strange arguing against a Covid-19 vaccine manufacturer.
Moderna stock has outperformed the S&P 500 by 531.3% and its sector by 526.9% in the past year. So, clearly, the markets have been kind to Moderna. However, moving forward, the company will need to focus on its therapeutics and vaccines for infectious diseases, immuno-oncology, rare diseases, autoimmune and cardiovascular diseases to better prepare for the future.
Stephane Bancel, CEO of Moderna, warned at the JPMorgan Healthcare Conference that the virus would be around “forever.” Bancel believes Covid-19 will become endemic, saying, “SARS-CoV-2 is not going away.” Considering the discovery of a new strain, I believe that there is logic to the argument. Still, as more companies through their hat in the ring, profits will dry up. Investors are already preparing their portfolios for a post-Covid future. It would serve Moderna well if it did the same.
Out of 16 analysts covering the biotech, six have gone with a hold recommendation, a sentiment I concur with. I believe shares offer limited upside. They need to fall further for Moderna stock to become an attractive proposition again.
On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.