Moderna Is Up More Than 70% in a Month After a 9-0 FDA Vote. Wall Street's Average Price Target Says It Should Fall 44%. What Gives?

Moderna (MRNA 10.28%) stock jumped about 10% on Thursday to $79.76 -- a fresh high for the year and the latest leg of a run that has carried shares up more than 70% in a month.

The catalyst? In June, an FDA advisory panel voted 9-0 that the benefits of the company's mRNA flu vaccine outweigh its risks, with a final approval decision expected by Aug. 5. Yet the average analyst price target still sits at around $45.

So what gives? When the market and the analysts covering a growth stock disagree this sharply, they are usually valuing very different things.

Image source: Getty Images.

What the FDA vote is worth

The 9-0 vote -- covering adults 50 and older across two age groups -- puts Moderna on track to have the first mRNA-based seasonal flu vaccine in the United States, assuming the agency clears it by the Aug. 5 decision date. In its late-stage study, the shot showed relative efficacy about 27% higher than a licensed standard-dose vaccine in that age group.

On its own, though, the flu franchise is not enormous. It is a way to diversify beyond COVID vaccines, and the meaningful revenue is largely a 2027-and-beyond story, not something that shows up this year. If the market were only pricing flu-shot dollars, the skeptics would have a point.

The bigger story is the pipeline

The stock's run-up, however, makes more sense once you look past the flu shot.

At its Science Day in late June, Moderna laid out three commercial franchises -- infectious-disease vaccines, its individualized cancer therapy, and rare-disease treatments -- alongside early programs including a multiple myeloma candidate and a rare-disease therapy for propionic acidemia, which it expects to launch by 2028.

With this backdrop in mind, the flu approval matters less for its own sales than as proof the platform can clear the FDA beyond COVID, which de-risks everything behind it.

Moderna needs that breadth because its original business is shrinking. COVID vaccine demand has fallen far from its pandemic peak, and the company has been cutting costs to match. First-quarter revenue was just $400 million, and management is guiding for only modest growth this year.

The bull case, in other words, isn't about the next 12 months -- it's about whether a pipeline of new vaccines and therapies can replace a COVID franchise that is clearly past its prime.

Fortunately, the company's balance sheet buys time to get there. Moderna ended the first quarter with $7.5 billion in cash and investments, enough to fund the pipeline for years even as sales remain well below their pandemic peak. For a company that was not long ago valued almost entirely on its COVID franchise, that cushion buys the platform time to prove itself.

But what about the stock's valuation? Have shares run too high, too fast?

A market capitalization of $32 billion, set against $7.5 billion in cash, certainly doesn't make the stock look expensive. But the stock's price-to-sales ratio of 13 is exceptionally high. So, overall, the stock appears to be trading at a premium -- one that may be difficult to justify given the uncertainties the company faces.

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NASDAQ: MRNA

Moderna

Today's Change

(-10.28%) $-7.87

Current Price

$68.69

Key Data Points

Market Cap

$30BMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.Market cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.

Day's Range

$68.00 - $76.87

52wk Range

$22.28 - $85.60

Volume

156K

Avg Vol

7.8M

Gross Margin

11.55%

So, what's the verdict?

The market seems to be doing its best to price the platform and the approval path. The price targets are anchored to a narrower, nearer-term view of revenue. But the stock's run-up reflects a genuine de-risking of the mRNA story. Ultimately, however, a stock near its high after a 70%-plus month prices in a lot of good news and little of the risk a pipeline this early still carries.

I'd rather wait for a pullback or more visibility into how the company will fare in the post-COVID era before considering buying shares.