Moderna Stock Looks Fully Valued Here, But It Has a Great Future

Moderna (NASDAQ:MRNA) stock is down from $385 to $309 since Merck (NYSE:MRK) announced a pill that cuts the risk of COVID-19 hospitalization in half.

The Moderna (MRNA) logo surrounded by syringes, pills and disposable face masks.
Source: Ascannio /

To be fair, even before the announcement, MRNA stock had been falling off a cliff. It was trading at $456 on Sept. 23. How is this possible?

Absent the COVID-19 vaccine, Moderna is a small drug company. Sales were $6.3 billion for the first six months of 2021. They were $803 million for all of 2020. They were $60 million for 2019.

But if you’re selling shares today based on this news, you’re making a mistake.

I have been recommending MRNA stock since late 2018, when it went public at $23.

As I wrote then, Moderna is less a drug company than a system for drug discovery. Messenger RNA had already given Moderna an impressive pipeline of potential drugs in 2018. Today it includes dozens of compounds, including vaccines for cancer, artificial hormones, and a heart disease treatment.

It’s the potential of these drugs that had me call Moderna the “stock of the decade” late last year. Success with its COVID-19 vaccine has given Moderna the cash, and the capital, to pursue all these drugs. Before COVID it needed support from Merck and AstraZeneca (NYSE:AZN) to do this work, at the cost of some future rights.

As I wrote in May, most of Moderna’s pipeline today consists of vaccines. These include flu vaccines, a vaccine against Epstein-Barr disease, even an HIV vaccine.

At the end of June Moderna had almost $8 billion in cash and short term investments to pursue this work.

Why MRNA Stock Plunged

The bears have their reasons. In the near term, these are good reasons.

The Merck drug could cut demand for Moderna’s COVID-19 vaccine. It’s an oral drug, a pill you can take at the first sign of infection. If you have what’s termed a “mild” or “moderate” case, you will still suffer, but you will do it at home. If you get the vaccine, of course, you may not get COVID at all.

Moderna CEO Stephane Bancel has suggested the pandemic could end in 2022, but that assumes people continue to vaccinate and get boosters. That doesn’t mean Moderna’s sales fall off a cliff. It could mean revenue slows from its current pace of about $20 billion per year.

Assuming the estimates are right, Moderna’s current market cap of $134 billion is almost 7 times sales. Merck sells for a little over 4 times sales, and it expects single-digit growth in 2022.  

Then there’s the fact that Moderna is no longer alone in the MRNA space.

BionTech (NASDAQ:BNTX), which developed what is known as the Pfizer (NYSE:PFE) vaccine, is now worth $60 billion. There are other start-ups. Most now have support from larger companies like Gilead (NASDAQ:GILD), Glaxo SmithKline (NYSE:GSK), and Sanofi (NYSE:SNE).

The next time there’s a race to develop something with Messenger RNA, Moderna will be just one player among many.

The Bottom Line

While I am bullish on Moderna, and own shares, I find the recent downdraft in the shares justified. Based solely on the fundamentals, Moderna today is fully valued.

If I were a trader, I should have sold a month ago and launched plans to nibble again in a week or two.

But I’m an investor. I don’t like to churn my holdings. I like to stay with companies for several years. That’s why I bought Moderna at $135/share, because I believed in the long-term future of MRNA technology.

It’s not about COVID. It’s about DNA becoming a programming language and Moderna being at the leading edge of that trend.

On the date of publication, Dana Blankenhorn held long positions in MRNA. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Living With Moore’s Law: Past, Present and Future available at the Amazon Kindle store. Write him at or tweet him at @danablankenhorn. He writes a Substack newsletter, Facing the Future, which covers technology, markets, and politics.

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