BioNtech (BNTX) and Pfizer (NYSE:PFE) received full FDA approval of their COVID-19 vaccine in August.
Moderna (NASDAQ:MRNA) is still waiting, but it should get approval soon. Moderna stock reached a record high earlier in August after it closed a deal to supply 25 million doses to Australia.
However, shares of Moderna have surged so much that I am bearish on the stock. Let’s take a look to find out if Moderna’s insanely high valuation is at all justifiable. (See MRNA stock charts on TipRanks)
Is Moderna Stock Valuation Really Ridiculous?
Geoff Meacham, Bank of America (NYSE:BAC) analyst, mentioned in August that Moderna’s stock valuation had moved from “unreasonable to ridiculous.” Notably, Moderna stock reached a stunning market cap of $195 billion a day before the analyst’s note.
Meacham believes the company would need to sell 1.5 billion doses for the next 17 years to deserve that kind of valuation. Moreover, every vaccine candidate of Moderna has to garner collective sales of $30 billion. Moderna's stock price has, indeed, dropped since reaching $497.49 on August 10.
The analyst believes Moderna stock can possibly plummet by 72.4%, to $115.
What is Moderna's Actual Worth?
Moderna believes it can manage to collect over $20 billion through COVID-19 vaccine sales in the current year. However, experts believe that it is highly unlikely for the biotech company to rake in such revenue in 2023 onwards.
In addition, Moderna is also planning to develop another mRNA (messenger RNA) vaccine soon. The company also wishes to expedite its experimental cytomegalovirus CMV vaccine into final-stage testing in 2021.
With many candidates in the pipeline, Moderna’s market cap can go higher than what Meacham predicts. However, there are many uncertainties that remain.
A Close Look at the Stock Fundamentals
Moderna now comes with two quarters of profitability. The biotech company earned $6.46 per share on $4.35 billion in sales in Q2.
Experts believe Moderna’s earnings per share can shoot up to $9.43 per share in Q3. For 2021, Moderna is expected to have an EPS of $29.74 on 20.13 billion in sales. Moreover, sales growth can increase by a quadruple-digit percentage.
Wall Street's Take
According to TipRanks' analysts rating consensus, Moderna is a Hold. Out of 13 ratings, there are four Buys, seven Holds, and two Sells.
The average MRNA price target is $285.30, while the stock price targets lie between a low of $85, to a high of $463.
Bottom Line
Moderna has managed to pull off robust sales growth so far. Experts believe it will continue achieve augmented sales for some time now.
Moreover, the company has the potential to clock substantial profit in the upcoming days. However, both sales and profit will possibly suffer a decline in 2022.
Disclosure: At the time of publication, Chris MacDonald did not have a position in any of the securities mentioned in this article
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