Is Moderna’s vaccine breakthrough really worth $100bn?

World

Is Moderna’s vaccine breakthrough really worth $100bn?

The company’s hugely successful Covid shot sent the stock sky-high, but its hefty valuation comes with some big risks

Max Nisen

Just 18 months ago, Moderna was an early-stage biotechnology company working on a new way of making vaccines worth $6.5bn (R92.5bn). Today, after it developed and delivered one of the fastest-arriving and most effective shots against Covid-19, Moderna’s market value is approaching $100bn (R1.423-trillion).

Some of the stock’s 1,000% gain is undoubtedly warranted. Wall Street analysts expect Moderna’s vaccine, which uses new messenger-RNA technology, to net a historic $17.6bn (R251bn) in revenue this year. But the company’s valuation is now in the same league as drugmakers that, unlike Moderna with its one vaccine, have multiple marketed medicines. Holding the stock at this level requires some assumptions about the future of the pandemic and a heroic tolerance for concentration of risk.

The central question for Moderna investors is how long Covid vaccine sales will last. The market for first and second doses is shrinking each day and is starting to concentrate around developing nations where prices are lower. As a result, the company’s prospects rely heavily on booster shots aimed at providing extra protection, should immunity from the initial round of vaccinations fade, as many expect. While mRNA vaccines are likely to be the boosters of choice because of their effectiveness and safety, it’s unclear how many people will get a Moderna top-up (Pfizer and BioNTech also make highly effective mRNA vaccines). That helps explain why Wall Street estimates for Moderna’s 2021 sales range widely, from $13bn (R185bn) — which would represent a decline from this year’s consensus forecast — to $22.2bn (R316bn)...

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