Moderna’s Q3 Numbers May Have Seemed Impressive, but They Aren’t Enough to Make the Stock a Buy

Shares of healthcare company Moderna (MRNA +8.44%) have been rising after the company reported its latest quarterly numbers and also boosted its guidance for the full year. That’s often a surefire recipe for success.

Although the company’s latest earnings numbers may have seemed strong, here’s why I wouldn’t buy the healthcare stock.

Image source: Getty Images.

Virtually all of the company’s revenue still comes from COVID-related products

In the September quarter, Moderna reported nearly $1.3 billion in revenue, up from just under $1 billion in the prior-year period. While Moderna has been launching new products, they’re still related to COVID, including combinations of the flu plus COVID. All of its COVID-related revenue accounted for 98% of the company’s top line, with the remaining sliver belonging to its respiratory syncytial virus (RSV) vaccine.

This is not an exciting, high-growth area that typically would or should warrant this type of bullishness. The numbers may look good, but investors shouldn’t forget that it’s also going up against some weak comparables due to a downward trend. Five years ago, for instance, back when COVID vaccines were in high demand, the company’s quarterly revenue for this same period was nearly $5 billion.

Investors should take that into account, because as impressive as the earnings beat may seem at first glance, the company’s revenue is still down when looking at a longer stretch. More importantly, this is also not likely to drive the company’s growth or its share price over the long term.

MRNA – Moderna

$275.65+$21.46 (+8.44%)

NASDAQ · As of 3:01 PM ET 11/09/26

Moderna’s inflated valuation makes the stock a risky holding right now

The company’s updated guidance calls for revenue growth between 15% and 25% for the full year. At the high end, that would mean management expects revenue to come in as high as $2.4 billion. Meanwhile, this is a business whose market cap is now north of $110 billion.

The math doesn’t line up, and it suggests a high degree of excitement and bullishness around the personalized cancer vaccine it’s been working on with Merck, which has been showing positive results in clinical trials. While it undoubtedly has tremendous potential, it isn’t approved yet, and there are operational challenges with mass-producing a personalized vaccine. Plus, it’ll have to share in the revenue and profit with Merck.

When factoring in all that, on top of an enormous valuation, it makes Moderna a very risky stock to be holding right now. The excitement may be high, but if it fades, the stock could be due for a considerable correction.

Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.