Moderna Stock Experiences Ups and Downs Amid Q3 Earnings Surprise

Moderna’s (NASDAQ:MRNA) stock has dropped 48% this year, but a promising Q3 report could signal a turnaround. The company announced revenue of $1.86 billion, with adjusted earnings of $0.03 per share, exceeding analysts’ projections of $1.25 billion in sales and a loss of $1.90 per share. This revenue boost was primarily driven by higher-than-expected sales of its COVID-19 vaccine. However, the launch of its new respiratory syncytial virus (RSV) vaccine generated only $10 million in sales, falling short of expectations due to distributors completing orders prior to regulatory approval. The upside in earnings was also aided by effective cost-cutting measures within the company.

Declining Sales and Future Expectations

MRNA stock has struggled as sales fell significantly in the post-pandemic landscape. To provide context, Moderna’s revenue dropped 64% year-over-year to $6.8 billion in 2023, largely due to declining demand for its COVID-19 vaccine. The company anticipates further declines, predicting sales will decrease to approximately $3.5 billion in 2024. Despite these challenges, many believe MRNA shares are currently undervalued at around $50.

Factors Supporting Future Growth

Several factors could support a rebound. While COVID-19 booster shots will provide some ongoing revenue, the new RSV vaccine may gain traction, thanks to its storage and administration advantages. It can be frozen and administered via syringe, making it easier to deploy compared to some competitors. Furthermore, it has no reports of Guillain-Barré syndrome (GBS), unlike GSK and Pfizer’s RSV vaccines.

Moreover, recent clinical trials have shown promise for its skin cancer vaccine. In combination with Merck’s Keytruda immunotherapy, it significantly improved survival rates for patients with late-stage melanoma, reducing the risk of recurrence or death by 44% compared to the use of Keytruda alone.

Moderna is developing around 45 products, with nearly a quarter expected to be commercialized within the next three to four years. The company aims to save $1.1 billion through various cost-cutting initiatives, which could bolster financial performance. Additionally, Moderna has a cash reserve of $9.2 billion, providing a solid foundation for potential acquisitions in the biotech field.

Moderna’s Volatile Journey and Future Outlook

MRNA’s stock performance has been unpredictable, mirroring the ups and downs of COVID-19 vaccine demand. To illustrate, returns for the stock include +143% in 2021, -29% in 2022, and -45% in 2023. In contrast, the Trefis High-Quality (HQ) Portfolio, comprising 30 stocks, has proven to be more stable and has outperformed the S&P 500 each year during this period. This portfolio showcases more stable returns, with less fluctuation compared to the S&P 500.

Facing an uncertain macroeconomic environment, there are questions about whether MRNA might repeat its recent performance dips or experience a recovery once again. Nevertheless, many analysts view Moderna as significantly undervalued at around $50, especially given that the average analyst price estimate of $91 indicates a potential upside of about 80% from current levels.

Comparing Moderna with Its Peers

While MRNA appears undervalued, examining how its peers perform on important metrics can provide further insights into its standing in the market. Readers can find useful comparisons for various companies across different sectors at Peer Comparisons.

[1] Returns as of 11/7/2024
[2] Cumulative total returns since the end of 2016

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.