Analyst Note| Karen Andersen, CFA |
We're raising our Moderna fair value estimate to $182 from $159 after adding a cardiology-focused mRNA treatment candidate and an Epstein-Barr prophylactic vaccine to our forecast, as well as incorporating recent COVID-19 vaccine contracts, including the recent U.K., Covax, and South Korea contracts. Overall, we still model $17.2 billion in COVID-19 vaccine sales in 2021 but have raised our forecast for 2022 to $19.7 billion (from $17.2 billion), incorporating recent contracts. These assumptions still fit with Moderna's updated guidance as of November 2021 of $15 billion-$18 billion in 2021 and $17 billion-$22 billion in 2022. In our model, we assume a significant drop in COVID-19 vaccine sales to $5 billion in 2023 as additional broad booster programs could be winding down, and $2 billion annually beginning in 2024 as the postpandemic focus could narrow to vulnerable populations (largely the elderly). In addition, we now include a 30% probability of approval and potential $2 billion in peak sales for AZN-8601, a VEGF-A therapy partnered with AstraZeneca that had positive phase 2 data in a handful of coronary artery bypass patients in November. We also include a 30% probability of approval for Moderna's Epstein-Barr vaccine, which has now entered phase 1 clinical trials. Despite Moderna's massive success with its COVID-19 vaccine, we think the changing competitive landscape, uncertain virus evolution, and many unknowns for safety and efficacy of its technology beyond COVID-19 all create too many questions to grant the firm an economic moat. Despite the recent pullback in share prices, we continue to see Moderna shares as slightly overvalued.