Down 74% Over the Past Year, Is Moderna Stock a Buy?

Key Points

• Moderna has struggled since COVID-19 vaccine demand has shrunk.

• The stock has correspondingly declined, as revenue has nosedived over the last few years.

• The long game is clinical trials in oncology and certain flu vaccines.

• 10 stocks we like better than Moderna ›

In the short term, Moderna (NASDAQ: MRNA) looks like a bad bet. It's coming off of the momentum of its COVID-19 vaccine, and doesn't have a lot of new ammo ready yet to expand in new directions. I think the stock might stay low for quite a while. But, if its pipeline of new products comes into play, including work on new treatments in oncology, then Moderna stock -- down 74% in the year ending July 21 -- might have some great long-term potential.

In 2022, Moderna had over $19 billion in revenue. In 2024, that revenue had fallen to $3.24 billion. So where's the appeal? Very recently, the company received approval for its COVID-19 for vaccine for at-risk children who are 6 months or older. This does open a new demographic for the company, but I have to question whether that will bring the company back to $19 billion in annual revenue.

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The pipeline

So where's the appeal? In its pipeline of future potential offerings, including:

• A seasonal flu vaccine, which is in phase 3 trials gathering immunogenicity and safety data.
• A seasonal flu/COVID combination vaccine that's in phase 3 testing.
• Oncology offerings, which is the area where I see the most promise.

The company is attempting to apply its mRNA technology to develop treatment for cancer through the intismeran autogene vaccine. Now, I don't pretend to be a doctor and understand the science, but the approach is in phase 3 clinical trials for melanoma, as well as current enrollment for two phase 3 studies for non-small cell lung cancer. Other potential areas of application include bladder cancer, renal cell carcinoma, and bladder cancer.

We don't know if these drugs will get to market, but the potential of anything on the oncology front is supremely encouraging.

The valuation

Valuation is very difficult here. Since the company has shifted to losses over the past two years, we can't go off of the price-to-earnings ratio unless we look out far into the horizon. Analyst estimates aren't calling for earnings per share until at least 2027, with high estimates expecting $3.52 per share that year. That would give it a forward (and I do mean quite a ways down the road) price-to-earnings ratio of 9 times its 2027 potential. Still, I wouldn't hold my breath on that forecast just yet.

Investors have to be very patient if they want to own Moderna. It has to complete testing and get its oncology drugs approved in order to really start gaining momentum again. Its respiratory advancements are great, but oncology is big business. According to BioSpace, the estimated market for oncology will hit $900 billion by 2034. That's a huge area for growth for Moderna if it can get its products through clinical trials and approved.

At the end of the day, it really comes down investors having to ask themselves: Can I handle the pain today, in order to hold out for the possible rewards in the future? I think Moderna offers a lot of potential, and fits a long-term investor's strategy. At present the company has a price-to-sales ratio of 3.6 times fiscal 2024 sales. In the company's latest quarterly update, it said it expected 2025 revenue of $1.5 billion to $2.5 billion, a further decline from the year prior. It is no exaggeration to say that everything about Moderna is about the future now. Yes its COVID shot is still useful, but it's time for the next big thing to spur things along.

If you're confident that its current trials will prove successful, then this is one to buy and sit on. One word of caution I'd throw out there, is that the stock could potentially decline even further if it reports a weaker-than-expected 2025, which could provide even better buying points for investors.

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David Butler has no position in any of the stocks mentioned. The Motley Fool recommends Moderna. The Motley Fool has a disclosure policy.