A Shot of Profits To The Arm

A Shot of Profits To The Arm

If you’re like most Americans you are excited to see mask mandates removed, traveling opening up, and people gathering freely. 

And while it finally feels that COVID is behind us, that doesn’t mean we’re out of the woods entirely. 

You see, there are 225 viruses known to infect humans across the globe. And we only have about 25 vaccines for these viruses. 

In other words, there is still plenty of work biotech firms need to do on the vaccine front if we want to avoid a future pandemic. 

Of course, there’s big money to be made, and one company seems to be leading the charge. 

They went from virtually unknown 3 years ago to being a household name. 

If you haven’t guessed by now, we’re referring to Moderna (MRNA), one of the fastest growing biotech companies in the world.  

What we found unusual was that the stock only appeared in the #4 slot for mid-cap biotech stocks amongst searches by financial pros and #14 for all biotech stocks.

However, besides Ocugen (OCGN) and Sorrento Therapeutics (SRNE), Moderna is the one Covid vaccine biotech that consistently shows up in our top search results.

That tells us this is more than just some flash in the pan. It’s the real deal.

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Moderna Business

Founded in 2010, Moderna (MRNA) is a biotechnology company which develops therapeutics and vaccines based on messenger RNA for the treatment of infectious diseases, immuno-oncology, rare disease, cardiovascular diseases, and auto-immune disease. 

The firm has over 19 programs in clinical trials, 44 developmental programs, 4 in Phase 3, 1 approved product.  

MRNA received U.S. FDA (full) approval for COVID-19 vaccine, Spikevax. 

Moderna has experienced exponential growth, it has more than doubled the size of its team over the last year, which spans to 3,000 members across the globe. 

The company plans to scale to 21 commercial subsidiaries across the world, including four new locations in Asia and six new locations in Europe. 

What makes Moderna so much better than its competitors is its approach to medicine. For example, the firm utilizes mRNA as a medicine, which is a fundamentally different approach than treating disease with other drug classes. 

Moderna is at the forefront of mRNA medicines—which take advantage of normal biological processes to express proteins and create a desired therapeutic effect. It enables the potential treatment of a broad spectrum of diseases. 

Moderna Financials

MRNA is one of the fastest growing companies in the world. It’s not everyday a company of its size is able to grow 2,000% year over year, but MRNA did exactly that in 2021. 

Incredible when you consider its revenues grew 1234% in 2020!

While next year will see a slowdown, the company is still expected to hit +140% growth.

The firm’s return on invested capital (ROIC) is nothing short of phenomenal, as it experienced a 163% return over the last twelve months. 

Its return on assets (ROA), also incredible, sitting at 74.6%. It shouldn’t come as a surprise then when you check out MRNA’s return on equity, which is a jaw-dropping 163% over the last year. 

And currently, the free cash flow is just phenomenal.

MRNA Valuation

When stacked against its competitors, MRNA is one of the cheapest names on the board if you base things on P/E ratios. MRNA has lower P/E than GILD, REGN, VRTX, and BNTX. 

Furthermore, MRNA’s stock price is 5.3X its free cash flow per share. Compared to the weighted average price to cash flow ratio of the S&P 500, MRNA shares are undervalued. 

And Wall Street tends to agree. The average analyst price for MRNA is $274.20, which is significantly higher from its current stock price. 

Our Opinion 8/10

Moderna (MRNA) has quickly grown into its $65B+ market cap over the last two years. And while we expect the pandemic to be over soon. We believe  MRNA will be a major player in trying to cure diseases like HIV, HSV, CMV, Flu, COVID, and RSV. 

Shares of the stock are down significantly from their 52-week highs (-64%) and are trading well below the average analyst estimate. However, we don’t expect that to last for too much longer, and that’s why we think it’s a good stock to own for the next 12-18 months.