Moderna Earnings: Maintaining $266 Fair Value Estimate as Broader Portfolio Catalysts Approach

Moderna MRNA reported second-quarter results that were largely in line with our expectations, and we’re maintaining our $266 fair value estimate. The second quarter is an off-season period for Moderna’s COVID-19 vaccine, which only generated sales of $293 million. In addition, manufacturing costs as the firm approaches the fall vaccination season are now largely fixed; Moderna is anticipating higher costs due to the switch to a new monovalent XBB vaccine, which doesn’t make use of any part of the prior BA.4/5 bivalent vaccine. However, our $7.5 billion forecast for full-year COVID vaccine sales for Moderna is in line with the firm’s $6 billion-$8 billion guidance, and we think our forecast for COVID vaccine sales in 2024 and beyond of roughly $5 billion annually fits well with this guidance, as it essentially eliminates the COVID sales from the first half of 2023 that are unlikely to repeat as vaccinations become increasingly focused on the fall season. Overall, we think that Moderna is still in the process of building a moat around its mRNA technology but that the current market valuation is out of step with the firm’s significant long-term potential in respiratory diseases, the broader infectious disease space, and cancer and rare diseases.

In line with our expectations, investment in the firm’s pipeline is increasing substantially as more phase 3 trials are initiated. We’re looking forward to seeing Moderna’s broad range of potential pipeline updates later this year (including phase 3 cytomegalovirus trial full enrollment and phase 3 data for a modified flu vaccine that could improve on influenza B efficacy levels) and into 2024 (potential approval of both respiratory syncytial virus and flu vaccines). In 2025, we think Moderna could begin to launch combination respiratory vaccines, which we think would further improve convenience and uptake.