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Motley Fool Issues Rare “All In” Buy Alert
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Moderna (MRNA 3.49%) shares delivered top returns to investors in the earlier days of the pandemic. The stock soared more than 400% in 2020. This year, though, the stock is heading for a 30% loss, even though Moderna’s coronavirus vaccine generates billions in revenue and profit.
Why? Investors are worried about revenue in a post-pandemic world.
Looking ahead to 2023, you might be wondering whether Moderna’s best days are in the past — or if this vaccine maker still presents an opportunity. Should you buy, sell, or hold Moderna in 2023? Let’s find out.
The past two years have been exceptional for Moderna. The biotech company launched its first product — the coronavirus vaccine — and that product became almost an instant blockbuster.
Last year, the company reported $18.5 billion in vaccine revenue. Moderna is on track to report at least $18 billion in vaccine revenue this year.
What about next year? Moderna has offered us some clues. First, it’s important to look at the changing vaccine landscape. So far, governments have purchased coronavirus vaccines directly from Moderna and other vaccine makers. That’s offered the companies and investors visibility on revenue.
Next year, though, government contracts will be over. Moderna and others will sell their vaccines in a private market to pharmaceutical distributors. In this scenario, we won’t have the same early visibility as we did when government contracts were announced. Moderna also will face more complex logistics as it sells to many more buyers.
Now let’s talk about revenue levels. It’s impossible to offer an exact estimate, but we have some elements that give us reason to be optimistic. The pricing of vaccine doses will be higher than today’s pricing, which could at least partially make up for lower volume.
Moderna has mentioned a price of $60 a dose, while rival Pfizer suggested its vaccine may cost $110 to $130. Pfizer also said its coronavirus products “will remain multibillion-dollar revenue generators for the foreseeable future.”
Finally, Moderna has offered us another clue — and maybe the best clue of all. The company predicts the coronavirus vaccine market will follow in the footsteps of the flu vaccine market, which represents 500 million to 600 million doses annually. Depending on vaccine pricing and uptake, the annual coronavirus booster market could range from $12 billion to $24 billion.
All of these elements suggest the Moderna vaccine/booster’s days as a blockbuster product are far from over. Even with sales coming in lower than in the past, revenue still could remain significant — and help push other candidates through the pipeline.
Next year might represent a bit of a transition year for Moderna as the company shifts to a private market. It also may take more than just one year to see how many people actually go for coronavirus boosters. So next year is unlikely to offer a definitive picture of vaccine revenue growth.
At the same time, Moderna may move closer to market with two respiratory vaccine candidates — one for flu, and one for respiratory syncytial virus (RSV). The company has said those potential products could launch in two to three years.
Moderna’s vaccine revenue probably won’t reach today’s levels in 2023. But the company could be heading toward a vaccine market that will ensure recurrent billion-dollar revenue — and a future as a multiproduct company.
Should you buy, sell, or hold Moderna in 2023? I would vote for buy and hold.
Moderna has eliminated a lot of the uncertainty regarding the post-pandemic booster market. In fact, the shares already have started to recover. They’ve climbed about 25% over the past three months.
Moderna is in the early stages of its growth story. It has more than 40 programs in development — and, as mentioned above, some candidates may reach commercialization soon. All of this means there are plenty of catalysts to lead the shares higher in 2023 — and 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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