The Moderna (NASDAQ:MRNA) vaccine was granted emergency use authorization (EUA) by the FDA on Dec. 18, 2020. Since then, MRNA stock has dropped 21% as of this writing. The end of the year may have been an appropriate time to take profit on the stock. After all, it’s likely that tax policy particularly as it relates to capital gains may be changing.
But aside from profit taking, Moderna is also experiencing some production obstacles in scaling its messenger RNA vaccine. And as new cases of the novel coronavirus continue to rise across the nation, skeptics are beginning to sound off.
However, this may present an interesting buying opportunity for savvy investors. And the reasons for the bullish sentiment may only be starting with the company’s Covid-19 vaccine.
mRNA May Be Having Its Moment
The Moderna and Pfizer (NYSE:PFE)/BioNTech (NASDAQ:BNTX) vaccines are the first to use mRNA technology. This is presenting both a catalyst and an obstacle.
First, let’s look at why it’s an obstacle. Simply put, the promise of messenger RNA (mRNA) has been tantalizing scientists for years. Instead of injecting a piece of the virus, an mRNA vaccine delivers tiny pieces of genetic code that tell cells to build proteins.
However, until the Covid-19 pandemic, the technology was never approved in a vaccine. The race to develop a vaccine thrust mRNA to the forefront.
However if you’re interested in buying this dip in Moderna, it’s important to understand that you’re investing in mRNA technology more than MRNA stock.
Moderna Needs to Prove It Can Deliver
It’s true that there will be intense interest to ensure that the Moderna vaccine is safely delivered. However in this case when I say Moderna needs to prove it can deliver, I’m being literal. The company has never produced a vaccine at scale. However, in theory, an mRNA vaccine should be easier (and faster) to produce.
That being said, the company is experiencing some delays as it brings multiple partners on board to mass produce the vaccine. And this was another reason that MRNA stock was dipping.
However, the company is now saying that it expects to deliver 100 million doses of its Covid-19 vacccine for the United States in the first quarter. If the company is able to deliver on that promise, it will go a long way to reassure investors about the potential of messenger RNA technology.
That certainly seems to be the case for Piper Jaffray analyst Ted Tenthoff who suggests that Moderna’s Covid-19 vaccine could generate $7.8 billion in sales in 2021.
What If a Covid-19 Vaccine Is Just the Start?
The best case scenario for Moderna is that the company’s Covid-19 vaccine candidate, mRNA-1273, is only the beginning. It may not be. Moderna has other mRNA vaccine candidates in its pipeline. The one that is furthest along is its Cytomegalovirus (CMV) vaccine, mRNA-1647. There is currently no vaccine for the virus that, while generally harmless in adults, can be quite harmful in infants.
I’m not going to pretend to be an expert on CMV. However, Moderna is projecting that peak sales for its CMV vaccine could reach between $2 billion and $5 billion. I was pleased to see that my InvestorPlace colleague Tom Taulli is also picking up on the company’s deep pipeline.
But let’s say for a moment that the CMV vaccine is not successful. It doesn’t change the narrative that mRNA technology may open up an entirely new approach to developing vaccines against a variety of viruses.
Buy MRNA Stock For Its Multiple Catalysts
Messenger RNA presents immense promise. However I get skeptical when a technology is promised to be the hammer to which everything else is a nail. With that said, I don’t mean to say that messenger RNA will be the solution for every virus known and those yet to come.
However, it does seem likely that mRNA is ready to go mainstream. And Moderna has multiple candidates in its pipeline. This should give Moderna multiple revenue streams over time to support the rising stock price.
On the date of publication Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for InvestorPlace since 2019.
