You would think that investors would love modern (mRNA -1.38%) based on their business performance. The company reported $4.7 billion in revenue for the second quarter of 2022. Almost half of that amount, $2.2 billion, was profit.
Moderna’s cash position exceeded $18 billion at the end of the second quarter. It is on track to sell $21 billion of its COVID-19 vaccines this year. The company also continues to obtain authorizations and approvals around the world for its new vaccine targeting the omicron variant of the coronavirus.
But all is not well for the vaccine leader. Here’s an image that sums up Moderna’s biggest problem:
A complicated and worrying image
The image above from the Centers for Disease Control and Prevention (CDC) is somewhat complicated. That’s because the image shows eight charts for different age ranges. And each of those graphs shows two different trends.
The dotted lines in each chart represent the seven-day average of new COVID-19 cases per 100,000 people in the US so far in 2022. The solid lines in each chart show the percentage of people in the who are fully vaccinated during the same time period.
Regardless of the age range, two things are clear from the charts. First, the number of COVID-19 cases per 100,000 is dropping quite a bit. Second, the number of fully vaccinated people in the US has essentially stagnated.
Obviously, lower numbers of COVID-19 cases are great for the US However, they may reduce the sense of urgency for Americans to get vaccinated. This results in lower demand for Moderna’s COVID-19 vaccines. Vaccination trends appear to confirm that demand is declining.
While Moderna’s financial results don’t show any major issues, its stock chart does. The vaccine stock is down more than 40% so far this year and is close to 70% below the maximum level set in the summer of 2021.
Getting a boost from reinforcements?
Investors are fully aware that Moderna’s revenue and profits are sure to plummet in the near future unless demand for its COVID-19 vaccines picks up. The most likely way for that rebound to occur is with the company’s omicron reinforcements.
Another wave of COVID-19 could be in store. In fact, the White House warned several months ago that as many as 100 million infections could occur in the US during the fall and winter season.
Moderna’s omicron booster has the potential to be more effective in providing protection against omicron sub-variants. People in the US and other countries may be more eager to get the new booster if there is a significant increase in COVID-19 cases.
However, even Moderna seems to recognize that its market will shrink in the future. The company recently stated that it believes the US COVID-19 vaccine market after the pandemic is over could reach $13 billion. This estimate assumes a vaccination rate of about 50% and a price of $100 per dose. While the global market would be larger, many countries would be less likely to pay as much per dose.
Moderna will not have this market to itself. Pfizer Y BioNTech they currently have a larger share of the US COVID-19 vaccine market than Moderna. Novavax it could also become a more formidable competitor with its protein subunit vaccine.
the biggest photograph
Uncertainties with current demand for the COVID-19 vaccine make Moderna a dodgy proposition at best at this point. However, there is a bigger picture for Moderna that could still be attractive to some long-term investors.
Moderna’s pipeline includes late-stage candidate vaccines targeting three other viruses besides the novel coronavirus: influenza, cytomegalovirus (CMV), and respiratory syncytial virus (RSV). All three could present significant market opportunities for the company. Moderna is also evaluating multiple programs in earlier-stage tests that could open up new markets.