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Motley Fool Issues Rare “All In” Buy Alert
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Moderna (MRNA -0.23%) investors didn’t need to have too much patience in the early days of the pandemic. The company brought its coronavirus vaccine candidate from drawing board to market in about nine months. And the stock climbed more than 400% in just one year.
Next year, though, Moderna investors may need to rely on their patience. We all want to know how much revenue the company will generate in a post-pandemic world. Moderna has offered us some clues about market size. Now, investors are eager to see what unfolds in 2023. But before making any investment moves, let’s check out the worst mistake Moderna investors can make.
First, let’s talk about a big transition ahead. I’m talking about the shift to a private market from a market defined by government contracts. During the pandemic so far, governments have struck deals with Moderna and rivals for doses. This has offered the companies visibility on upcoming sales. And it’s streamlined logistics. Companies only have a few customers: governments.
Since we have been in the middle of a pandemic, governments have wanted to protect their entire populations. This has led to massive vaccine orders — and blockbuster revenue for vaccine makers. Moderna reported $18.5 billion in vaccine sales last year. The biotech expects to report $18 billion to $19 billion this year.
Investors worry about a drop in vaccine sales next year as the pandemic shifts to an endemic situation — and as government contracts end. Revenue surely will decline. But we still may be looking at blockbuster levels. And the good news is this revenue may be recurrent as people go for annual coronavirus boosters.
Moderna’s prediction for global post-pandemic, vaccine/booster market size ranges from $8 billion to $32 billion. Two factors will determine the exact size: the price of boosters and the number of people who go for them. The latter is the biggest unknown right now.
Moderna says uptake could follow in the footsteps of flu vaccination. This suggests the need for about 600 million doses per year. And that narrows the potential market prediction down to the range of $12 billion to $24 billion.
Investors may expect 2023 to bring a clear answer to the question of market size. But that may not happen. The worst mistake investors can make in 2023 is to expect the year’s vaccine orders to define future demand — and decide to buy or sell Moderna shares based on that.
I expect 2023 to be a year of transition. And that means the number of people who actually get booster shots next year may not be representative of long-term trends. We’ll need to see the trend over at least a couple of years to determine if coronavirus vaccination really does mirror that of the flu.
So, what does this mean for investors? It will be important to monitor vaccine demand over time. But I wouldn’t make investment decisions based on that element alone. Instead, it’s better to base your decision on Moderna’s full picture. That includes more than 40 programs in development and three non-coronavirus candidates in phase 3 trials.
In 2023, it’s a great idea to buy Moderna shares or add to your position for the company’s long-term potential. Moderna is an mRNA expert, and it’s proved that its mRNA technology works in humans. That doesn’t mean every program will be successful. But if even a couple of Moderna’s candidates result in commercialized products, the future could be bright.
All of this means, concerning the coronavirus vaccine program, investors will need patience in 2023. The good news is this patience may pay off big over time.
Adria Cimino has no position in any of the stocks mentioned. The Motley Fool recommends Moderna Inc. The Motley Fool has a disclosure policy.
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