Moderna (MRNA) has seen a meteoric rise in growth and become a household name as one of the leading COVID-19 vaccine manufacturers. However, the stock has slumped as of late — down around 60% from a September 2021 high of nearly $450.
According to Jefferies’ (JEF) Michael Yee, managing director covering health-care equity research, the pharma and biotech company’s stock is in a rut due to not being able to meet the market’s expectations.
“What I think in 2022 is that the overly high expectations and significant valuation is going to lead to challenges in 2022,” Yee told Yahoo Finance Live. “And I think there's going to be a lot of money flow out of this name as people digest what's next for the company beyond COVID vaccines. And I think that's always going to be a challenging step for biotech.”
Yee joined Yahoo Finance Live to discuss the outlook for Moderna, the impact to vaccine-maker stocks as new COVID-19 variants surface, and the latest Centers for Disease Control and Prevention (CDC) data.
While the number of Omicron variant cases is beginning to show signs of falling in certain parts of the country, hospitalizations remain at or near record highs. Already understaffed U.S. hospitals are also bracing for an exacerbated staffing crunch, with deadlines for health-care worker vaccinations in many states fast approaching.
Moderna is trading at around a $70 billion market cap today. According to Yee, the company has around $20 billion to $25 billion in cash on hand. However, although he said current earnings multiples are attractive, its strong revenues must be sustained in order for Moderna to continue its rapid growth.
“And if you look at the consensus numbers over the next few years, people still have the vaccine revenues falling,” he said. “I think it is rational to believe that vaccine revenues will fall. So what I'm saying is I think it's definitely plausible that this stock can go to $150 in the short to medium term as money flow continues to come out of this name and as people figure out, again, ‘What is the next catalyst to really get this up?’”
And while he cited Moderna’s mRNA vaccine technology and research as being a unique value proposition that may set the company apart from immediate competitors like Pfizer (PFE), the question remains as to what its next major product will be.
Moderna released interim Phase 1 data for its mRNA flu vaccine to a relatively lukewarm reception back in December. Yee believes that the lackluster trials put the ball in Moderna’s court to provide more impressive applications in medicine for its mRNA platform before investors become more bullish on the stock.
“So what I think is the most interesting value proposition is that [Moderna] will try to combine the COVID vaccine with the flu vaccine — the flu data was good, but not super great — and that they could combine that. That would allow you to get two things in one, high-end efficacy, all simple, very easy, and with some price and premium.”
Thomas Hum is a writer at Yahoo Finance. Follow him on Twitter @thomashumTV