Investors who are looking for healthy returns have certainly flocked to Moderna (MRNA). And it has paid off handsomely. With its rapidly produced and highly-effective coronavirus vaccine, Moderna stock has skyrocketed 231% year to date, crushing the 18% rise in the S&P 500 index.
But is now the time to take profits and wait for a pullback? The company is set to report second quarter fiscal 2021 earnings results before the opening bell Thursday. After its vaccine candidate, mRNA-1273, generated 94.1% efficacy, Moderna was the second company, behind Pfizer (PFE) and its German biotech partner BioNTech (BNTX) to receive Emergency Use Authorization (EUA) status from the Food and Drug Administration.
The subsequent rush to Moderna sent the company's valuation soaring past $140 billion, ranking it as one of the market’s largest biotech stocks. With the stock now trading at all-time highs, it’s safe to say there are healthier stocks on the market. Then again, while its valuation might appear stretched, the Delta variant of the coronavirus continues to rise in several states. As such, the company’s revenue and estimates have also been climbing.
Over the past thirty days the EPS estimate for the just-ended quarter has risen more than 4% to the to the current level of $6.01 per share, which reflects year-over-year growth of more than 2000%. Meanwhile, Q2 revenue is expected to be $4.29 billion, up 6368% from the year-ago quarter. In other words, there are tons of high expectations attached to MRNA stock, which some analysts sees could be worth north of $1 trillion by 2030. Investors are anxious to hear what the company has to say on Thursday about its growth expectations for both the near term and long term.
In the three months that ended June, the Cambridge, MA.-based company is expected to earn $6.04 per share on revenue of $4.28 billion. This compares to the year-ago quarter when the company lost 31 cents per share on revenue of $66.35 million. For the full year, ending in December, earnings are expected to be $24.57 per share, reversing a loss of $1.96 a year ago, while full-year revenue of $18.32 billion would rise 2180% year over year.
The projected 2180% year-over-year surge in full-year revenue underscores the dominance of Moderna’s business and expected growth. The question is whether all of this growth is currently priced into the stock. This is not an easy question to answer. Currently, in countries like the US, UK, India and Indonesia, the Delta variant is gaining steam. What’s more, authorities have reported mixed results from different variants in countries such as Italy, Germany and France. The point being, the virus — in its various iterations — isn’t going away.
As such, having a robust vaccine will keep the company at the forefront of many discussions aimed at protecting the globe against newer and different variants. What’s more, aside from protections agains newer variants, there continues to be a discussions about booster shots that might be needed to strengthen the existing doses to prevent future infections.
These factors, along with support Pfizer’s increasing its revenue guidance for 2021 will bode well for the results Moderna is expected to report. On Thursday these topics, along with the Moderna's guidance, will be central to evaluating Moderna’s stock potential. All told, Moderna stock should be held by existing investors.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.