After breaking out at above $150 this month, Moderna (NASDAQ:MRNA) is losing some momentum. Despite news of the Food and Drug Administration giving it authorization of the vaccine against COVID-19 for emergency use, the stock is backing down from all-time highs.
Markets are irrational but are also forward-pricing machines. The “sell-on-the-news” mentality is pressuring shares at these levels. At a $55-billion market capitalization, MRNA stock is worth close to that of Gilead Sciences (NASDAQ:GILD) and Regeneron Pharmaceuticals (NASDAQ:REGN). The market already accounts for much of the vaccine sales for the coming year.
The U.S. government ordered 200 million doses of Moderna’s mRNA-1273 vaccine. It has the option to buy an additional 300 million doses. Europe ordered an additional 80 million doses.
The region has a total commitment of 160 million doses. At $30 – $40 per dose, the value of those two orders is around $12.6 billion in revenue, on average.
Those sales will value MRNA stock at around four times its market cap. When Regeneron trades a 6.5 times sales and Gilead is at three times, then Moderna is not over-priced.
In the months ahead, the world will find out how effective the vaccine is against the virus. From there, forecasting annual sales will become clearer.