Moderna Gives Growth Investors a Lot to Like Even as Vaccination Rates Rise
With a gain of 265% in the last 12 months, there's growing sentiment that MRNA stock is due for a correction. Short-term investors may want to stay aw...
Moderna (NASDAQ:MRNA) was an unquestioned success stock in 2020. The company was one of the first to bring a vaccine candidate to the clinical trial stage. And it was second only to Pfizer (NYSE:PFE) to receive Emergency Use Authorization (EUA) for its mRNA vaccine.
MRNA stock is up a whopping 265% in the 12 months ending June 30, 2021. If you simply looked at the analysts 12-month price targets, you might think it's time to take some profits. Plus, while short interest on the stock is low at about 4%, it has increased by about 20% in the last month. So, it's not like the bears have no teeth.
However, there's a broader story surrounding Moderna. And that means the story is likely to get better for the biotech company.
Exporting Its Covid-19 Vaccine to the World
The United States continues to buy Covid-19 vaccine doses in preparation for what many experts believe will be the need for booster shots at some point. Whether or not this will become an annual event (such as the flu and pneumonia vaccines) is still open for speculation. However, for the rest of 2021 this will remain a primary source of revenue for Moderna.
But if investors are becoming bearish on MRNA stock because of the rising vaccination rate in the U.S. market, they should reconsider. Only about 10% of the world's population is fully vaccinated. That gives Moderna a long runway to increase production.
For example, on June 29, the Indian pharmaceutical company, Cipla, announced it received an EUA to import the Moderna vaccine. And the World Health Organization (WHO) announced it is likely to buy up to 466 million doses of the vaccine in 2022.
A Robust Pipeline That Needs Time
Biotech investors know that when you're considering a company to invest in, having a drug (or in Moderna's case a vaccine) in market is good. However, having more products on the way is even better. In fairness, Moderna does not have any vaccines or treatments in market aside from its Covid-19 vaccine.
That is likely to change over the next few years. The company has approximately a dozen vaccines or therapeutics in at least a Phase One clinical trial. And they have several more in pre-clinical development. Of course, none of this means that any of these are a sure thing. But Moderna will have a war chest of cash to advance these candidates through the pipeline.
However, with not one, but two, mRNA vaccines in market, investors should have plenty of optimism.
Confidence is Key
One of the lingering concerns among those who are unvaccinated by choice is the ambiguity of an mRNA vaccine. Prior to the Covid-19 pandemic, there had never been a vaccine that used this technology. That creates a circular argument where proponents can't prove that there's no statistically significant risk, and detractors can't prove that there is. Only time will tell. However, right now time looks to be on Moderna's side.
No vaccine is without risk. And no vaccine will be 100% effective. But at this point, the reward is outweighing the risk. And that should provide confidence in the company's other vaccine candidates, many of which use the same mRNA technology.
MRNA Stock is a Buy, But Wait For a Consolidation
If Moderna was only a Covid-19 story, growth investors would do well to hold onto MRNA stock through 2022. Moderna is on track to deliver no less than 800 million and up to 1 billion doses this year. And with the company's Covid-19 vaccine generating a 70% net profit margin, this won't just be a one-year story.
However, with the Covid-19 vaccine serving as a catalyst for future pipeline development, Moderna is looking like it will have room to run. But perhaps not right now. MRNA stock has made a strong move to the upside and there's likely going to be some consolidation before it moves up higher. Nevertheless, if you've bought the stock at any point in 2021 or before, you're in little danger of seeing your investment lose value.
Like its vaccine, only time will tell. But time is looking to be a friend for investors in MRNA stock.
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