Modern (NASDAQ:MRNA) is reaping the benefits of its successful Covid-19 vaccine, which is pushing MRNA stocks higher and higher. He is now winning more contracts to deliver the vaccine, and analysts are taking note.
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And the stock climbed. Especially since on December 18, the FDA approved its Covid-19 vaccine for emergency use. MRNA shares, for example, have risen more than 82% in the past six months. And over the past two months, the stock has climbed more than 60% to about $ 111.
Profit forecasts and valuation
In addition, MRNA shares place at a reasonable valuation, despite the recent rise, in 2021 and 2022. Analysts surveyed by Looking for Alpha now shows that its earnings per share (EPS) will reach $ 9.46 in 2021. This is higher than a loss of $ 1.69 in 2020.
In addition, I estimate for 2022 a profit of $ 9.92, or almost $ 10 per share. This means that MRNA share will trade 11.4 times EPS in 2022. This is seen by dividing $ 114.39 by $ 10 EPS. This is a very fair valuation.
However, I believe it can withstand the potential earning power of the bank. Every day, the company seems to be taking on new contracts for its Covid-19 vaccine and related products.
The company, for example, has just entered into the U.S. military for an additional $ 1.97 billion contract for 100 million doses. That’s about $ 20 per dose. That is in addition to up to 770 million doses confirmed on December 18, according to Moderna.
I think it is possible that its earnings power will be at least $ 12 per share over the next few years. This is 20% higher than analysts now conservatively estimate.
In addition, MRNA shares at 15 times the earnings, a more suitable valuation for a company with such earnings power, will be worth much more.
For example, 15 times $ 12 EPS yields a price target of $ 180 per share. This is a potential gain of more than 57% on the $ 114.39 price on December 29th.
Modern long-term value
Moreover, it is not out of the question that Moderna can sell 1 billion doses annually. At $ 20 per dose, that means revenue would be $ 20 billion annually.
This price is significantly lower than a rumor of $ 50 to $ 60 per dose price level. This is what The Financial Times and Reuters reported in July that Moderna was going to price its vaccine. In other words, my income estimate is very conservative.
Currently, the stock is trading 6 times 2021’s earnings, based on its Looking for Alpha income forecasts. Therefore, MRNA must have 6 times $ 20 billion in turnover with a market capitalization of $ 120 billion.
This represents a profit of 172% above the current market value of $ 44.08 billion, ie 2.72 times its price today.
In other words, MRNA share could be worth $ 311.14 in the long run, based on 1 billion doses per year at $ 20 per dose. This is found by multiplying the current price of $ 114.39 2.72 times.
And do not forget that we are conservative in our income estimation.
Therefore, we can say that based on its short-term earnings strength, MRNA stock is worth 57% more at $ 180. And based on its long-term earnings, the stock is worth 172% more at $ 311.14.
What to do with MRNA Stock
Do not just take my word that MRNA stocks are undervalued. For example, Tiprange reports that 16 analysts believe the average price target for the stock should be $ 148.31.
This represents a potential profit of more than 30% above the current price.
Further, Yahoo! Finance reports that 15 analysts have an average price target of $ 140.80 for MRNA shares. This represents a potential profit of 23% above today’s price.
Whether you look at MRNA from a consensus in the short term, long term or analysts, the target price is still significantly higher than today. If this happens, investors in MRNA stocks have a good chance of making money.
At the time of publication, Mark R. Hake (directly or indirectly) had nothing positions in any of the securities mentioned in this article.
Mark Hake manages the Total Return Value Guide what you can review here.