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Moderna: Shares Remain Deeply Undervalued, Despite Our Lower COVID-19 Vaccine Projections

We assume demand for COVID-19 vaccines will remain at trough levels for the foreseeable future.

Illustration shows a hand wearing a latex glove and holding a syringe filled with clear liquid shown over a red and yellow backdrop that includes a hospital symbol

Key Morningstar Metrics for Moderna

In conjunction with Pfizer’s PFE decision to reduce its COVID-19 vaccine revenue guidance for 2023 from $13.5 billion to $11.5 billion, we have slightly reduced our COVID-19 vaccine sales forecast for Moderna MRNA for 2023 from $7.5 billion to $7.2 billion, closer to the midpoint of the firm’s $6 billion-$8 billion guidance for the year.

Moderna management reiterated this guidance in a statement on Oct. 16, noting that it would have more information on U.S. demand by its quarterly earnings call on Nov 2. We think Moderna’s guidance is less likely to change significantly, as management did not issue guidance on the U.S. market until the second quarter, when initial sales contracts were put in place.

That said, we’re lowering our fair value estimate for Moderna from $266.00 to $227.00, as we now assume demand for COVID-19 vaccines will remain at these trough levels for the foreseeable future, with roughly $4 billion in annual COVID-19 revenue for Moderna beginning in 2024 (down from our prior estimate of $5 billion). Moderna is likely to launch a combination flu and COVID-19 vaccine in 2025, which could help pull demand for COVID-19 vaccines slightly closer to the annual 150-million-dose demand for flu vaccines in the United States. However, we think there are too many uncertainties in the market relating to the duration of vaccine protection and the severity of new COVID-19 variants to assume additional demand at this point.

We think Moderna is still in the process of building an economic moat around its mRNA technology, although we are increasingly bullish on its ability to translate success in COVID-19 into other respiratory diseases (led by RSV and flu), cancer (positive phase 2 data in melanoma), and rare diseases (positive proof of concept data in two leading programs). However, aggressive spending on Moderna’s growing pipeline is likely to push it into the red through 2026, which may discourage investors with short-term horizons.

Moderna Stock Price

Source: Morningstar Direct.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

Karen Andersen

Strategist
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Karen Andersen, CFA, is a strategist for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. She is responsible for biotechnology research.

Before joining Morningstar in 2005, Andersen received a master’s degree in business administration from Rice University, where she served as senior healthcare analyst for the M.A. Wright Fund and earned the distinction of Jones Scholar. She has scientific research experience in both academia (at Rice University and the University of Queensland in Australia) and industry (at Lexicon Genetics and a subsidiary of Genzyme).

Andersen also holds a bachelor’s degree in biochemistry from Rice University, where she graduated magna cum laude. She is a member of Phi Beta Kappa and holds the Chartered Financial Analyst® designation. She ranked first in the biotechnology industry, and had the highest score overall, in The Wall Street Journal’s annual “Best on the Street” analysts survey in 2013, the last year the survey was conducted.

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