Moderna Inc MRNA shares are experiencing weakness for a second straight session following the release of its quarterly results.
The Moderna Analyst: Oppenheimer analyst Hartaj Singh downgraded Moderna shares from Outperform to Perform.
The Moderna Thesis: Moderna exceeded Oppenheimer's conservative sales/earnings expectations for the second quarter, analyst Singh said in a note.
The company provided greater visibility into potential 2022 and 2023 sales, and its evolving margin structure, the analyst added.
After 2023, COVID-19 vaccines potentially could be an over $10 billion/year business, according to the analyst.
The takeaways from the company's update are sales will likely peak in 2022/23 and increasing operating costs will decrease its currently exceptional adjusted operating margin, Singh said.
The company now has the physical and human capital to rapidly invest in its business, the analyst said. The analyst expects COVID-19 vaccine sales to fund future growth.
The company continues to "execute superbly" on its COVID-19 vaccine portfolio and is moving earlier-stage clinical projects to mid-stage development in various other modalities, Singh said.
At least three of Moderna's projects, namely cytomegalovirus, respiratory syncytial virus and flu vaccine are in mid-/late-stage development, with commercialization likely in 2-3 years, the analyst said.
However, with a market cap of about $170 billion, the largest among biotechs and up 300% year-to-date, Moderna's shares are fairly pricing a tremendous amount of future recurring revenues and pipeline progress, Singh said.
Given the non-COVID-19 pipeline is still 2–3 years away from commercialization and COVID-19 vaccines will start facing financial pressure as early as 2023, Oppenheimer said it is moving to the sidelines.
"We note that as MRNA's pipeline progresses, particularly across other modalities, we could become constructive again," the firm added.
MRNA Price Action: At last check, Moderna shares were down 1.60% at $409.56.
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