Moderna (NASDAQ:MRNA) stock fell 5% overnight after receiving mixed results on a large-scale study of its seasonal flu vaccine.
The vaccine uses the same messenger RNA technology as Moderna’s Covid-19 vaccine but targets four strains of influenza simultaneously.
MRNA Stock’s Vaccine Dependence
Moderna went public in late 2018 at about $19 per share with a pipeline of cancer, heart disease and vaccine drug candidates. But the Covid-19 pandemic made it a star, and Moderna is still trying to digest its success.
The price of success includes patent lawsuits in which it’s defending its 2020 work with the government while challenging rival BioNTech (NASDAQ:BNTX) on its use of the MRNA technology.
It also includes a high public profile, with the Senate targeting price hikes on the vaccine, originally developed with government support. The company tried to sidestep this by continuing to offer free Covid shots after the government’s emergency authority expires this spring.
But Moderna stock has become dependent on its pandemic success. Moderna brought in about $14 billion during the first three quarters of 2022, nearly $6 billion in profit. Another $5 billion in revenue is expected for the fourth quarter, to be reported on Feb. 23. Earnings of $4.66 per share are expected against $11.29 last year. Skepticism over how long Moderna can keep up the earnings pace are behind its price-to-earnings ratio of six.
A successful flu shot would change the trajectory. Flu shots were a $5 billion market in 2020. That market is expected to double by 2030. Moderna’s new study shows an immune response against the rare Influenza B strain that falls short of current vaccines. Moderna said it has adjusted its formula and will conduct another study.
What Happens Next?
If this is a short-term setback and Moderna’s new shot works against four types of flu, today’s MRNA stock price will look like a bargain. But that remains to be seen.
On the date of publication, Dana Blankenhorn held a long position in MRNA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
