As one of the first companies to obtain approval for its Covid-19, there is no doubt that Modern (NASDAQ:MRNA) is one of the best investments on the market today. In 2020, Moderna’s shares rose about 434% with the promise of more gains ahead.
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And as the inoculation of the masses continues, the momentum of this stock does not seem to be going down anytime soon. Some people are even calling it the decade’s investment.
Therefore, with a vaccine expansion plan in progress and new formulas in development, it is definitely worth keeping Moderna’s stock in the long run.
Modern Stock has a long track of growth
For many biotech companies, the pursuit of producing a Covid-19 vaccine on an accelerated schedule was not an easy task. Although many companies have produced a formula for success, one topic we continually listened to was messenger RNA (mRNA). It is because Pfizer (NYSE:PFE), BionTech (NASDAQ:BNTX) and Moderna were among the companies capable of incorporating the molecule in their candidate vaccines.
Although mRNA vaccines are able to treat Covid-19 effectively, this is only part of the fascination. According to the research, mRNA is a nucleic acid that can tell our cells to produce any type of protein we want. Ultimately, this means that more mRNA vaccines can be developed and used to cure a range of diseases, such as cancer.
Accordingly, after the launch of its new vaccine against coronavirus, Moderna also announced three new development programs for infectious diseases – vaccines for seasonal flu, HIV and the Nipah virus. The shares rose 4% after those details were released. In addition, contributing to the rally, MRNA also announced that it is working on a vaccine to combat the South African variant of Covid-19. The shares soared 10% the next day.
Therefore, Moderna was able to create a successful Covid-19 vaccine and the demand for this drug will continue to be high in the coming years. But the stock also has many more benefits in the long run. This is because the company’s mRNA technology will allow the development of new treatments at an accelerated rate. This is a long-term game changer for Moderna’s stock.
How are the numbers?
Clearly, Moderna’s coveted mRNA technology offers the company a huge opportunity for growth. However, it is also worth looking at the company’s finances to decipher the long-term returns of that investment.
At its current price, Moderna’s shares have a market capitalization of $ 65 billion. For a company of this size, this is a huge assessment. However, a large market capitalization is not a major cause for concern, given the company’s revenue potential. Experts estimate that profits from the distribution of the new coronavirus vaccine will reach $ 40 billion and MRNA could “provide around 40% of the market”. According to Bernstein analyst Ronny Gal, the company will generate $ 13.5 billion in sales this year.
In terms of liquidity, the biotech giant also has cash reserves of $ 4 billion in the third quarter of 2020. While it is likely to lose some money for short-term expenses, that stock will become much larger as revenue enters.
Therefore, given the growth in the final result and the strong liquidity position, there is a good chance that Moderna will be profitable by the end of 2021.
The Bottom Line
As cases continue to increase worldwide, the distribution of vaccines to the masses will be light at the end of a very dark tunnel. For Moderna, the revenue from its Covid-19 vaccines will also be a big breeze in favor of its stock in the short term. And as demand remains stable, we should see stock prices rising in the coming months. But MRNA also has legs for the long term – I think Moderna is a type of “buy and keep forever” type of action.
The company’s mRNA technology will continue to help it develop innovative formulas to combat various diseases. In addition, the capital of the new MRNA coronavirus vaccine will help finance these projects. The only caveat is that many of these projects are still under development – it may take years before they are approved.
That said, Moderna’s shares have great long-term potential. Only most ideal for risk-tolerant investors.
As of the date of publication, Divya Premkumar did not hold (directly or indirectly) any positions in any of the securities mentioned in this article.
Divya Premkumar has a degree in finance from the University of Houston, Texas. She is a financial writer and analyst who has written stories on various financial topics, from investments to personal finance. Divya has been writing for InvestorPlace since 2020.