By all accounts, drug maker Moderna (MRNA) should not have had the quarter it did. It’s got one of the few COVID-19 vaccines in existence. That should be a heavy seller by any measure despite the sheer amount of controversy behind it.
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Yet, its latest earnings report proved to be nothing but a disaster that sent shares tumbling over 20%. That’s definitely not good news, especially when you consider the company’s focus on one drug line. This is enough to leave me bearish on a company that should be ruling the market. (See Analysts’ Top Stocks on TipRanks)
Looking at Moderna stock, it’s clear that the COVID-19 vaccine didn’t do a whole lot for it until later in the year. The company spent the first half of 2021 struggling to break above $200. It finally did in early June, and from there, the company saw an impressive surge that saw share prices more than double.
Moderna stock nearly broke above $500 per share in early August, but those highs didn’t last all that long. By late September, the company had slipped back under the $400 mark, where it has continued to fall. (See Moderna stock charts on TipRanks.)
Moderna’s earnings report proved a disappointment on every front. The company posted $7.70 per share in earnings against consensus estimates that called for $9.05 per share. Revenue also disappointed, coming in at $4.97 billion against an expected $6.21 billion.
Moderna also brought out some disappointing projections for its immediate future. The company expects to deliver 700 million to 800 million doses of its COVID-19 vaccine. Earlier projections called for 800 million to one billion. Moderna expects to realize between $17 billion and $22 billion in sales for the full year. This compares poorly against Pfizer (PFE), which expects sales of $36 billion this year and $29 billion next year.
A One-Trick Pony Seldom Succeeds
The biggest problem with Moderna is that it doesn’t seem to have much going on beyond the COVID-19 vaccine. Don’t get me wrong, if you’re only going to have one tool in your toolbox, that’s quite the tool to have. However, trying to build a company around one item exposes that company to all sorts of potential disasters.
A look at Moderna’s blog says it all. Most blogs would tell the story of what a company is doing throughout its product line and mention all the different possibilities at play.
Moderna’s blog has a common theme running throughout all of 2021 and back into 2020 – it’s all COVID-19, all the time. Looking at Moderna’s blog before COVID-19 is surprisingly spotty; one blog from February 2020 talks about rare diseases, though doesn’t go into much detail about what those actually are.
Comparing Moderna to Pfizer is particularly disastrous. Pfizer has made great strides with its vaccine, and that vaccine joins a wide range of treatments for various diseases. Pfizer even has a commercial lineup of products. Moderna, meanwhile, seems pretty much neck-deep in COVID-19, and if the disease were to ever actually die off, Moderna would be left up a creek without the benefit of a paddle.
Wall Street’s Take
Turning to Wall Street, Moderna has a Hold consensus rating, based on five Buys, five Holds, and three Sells assigned in the past three months. The average Moderna price target of $333.67 implies 57% upside potential.
Analyst price targets range from a low of $115 per share to a high of $468 per share.
Concluding Views
Granted, the chances of COVID-19 going away for good are slim. We’ve seen evidence already that suggests it may be with us forever, much like the cold or the flu. That should bake in a certain level of demand for Moderna’s vaccine. In addition, there’s no doubt that Moderna has done well for itself with COVID-19 vaccines; the numbers bear that out.
However, until Moderna can get some other products under its belt, its overall progress will always be somewhat limited. A company whose growth is limited by its lack of marketable products is only so attractive, and that’s why I’m bearish on Moderna stock.
Disclosure: At the time of publication, Steve Anderson did not have a position in any of the securities mentioned in this article.
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