Raising Our Moderna FVE to $202; Shares Undervalued
We think Moderna is on its way to building a narrow moat, with a potential fourth vaccine dose and annual COVID-19 booster shots.
We're raising our Moderna (MRNA) fair value estimate to $202 per share from $182 in conjunction with the firm's full-year 2021 financial results, as we have slightly raised our near-term sales assumptions for the firm's COVID-19 vaccines and also included additional mRNA development programs in our model.
Moderna continues to make progress with potential fourth dose and annual COVID-19 booster shots, with an omicron booster currently in a clinical trial and a new bivalent vaccine (containing the original vaccine and the omicron variant vaccine) entering trials. Although it is unclear what combination of vaccines will be needed in the fall of 2022 and beyond, as visibility on future variants remains poor, Moderna management insists that a booster of some kind will be needed this fall, as antibody levels wane, particularly in the face of the omicron variant, with more breakthrough infections expected nine months after a third dose. We continue to model additional booster sales for vulnerable populations (including seniors), and we now include slightly higher prices, as the U.S. market could move to a mix between government contracts and private market sales. More broadly, Moderna now has a total of 25 development candidates in clinical trials, and even if sales dip in 2023-2024 ahead of new launches from the firm's pipeline in the absence of new COVID-19 variants, we're increasingly confident in a long-term sales trajectory from the firm's diversified pipeline.
We think Moderna is on its way to building a narrow moat, and we assign the firm a positive moat trend.
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Karen Andersen does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.