Pipeline Diversification And Aging Trends Will Open New Markets

Key Takeaways

• Rapid pipeline diversification and new vaccine approvals target aging populations and oncology, opening major growth opportunities and recurring revenue streams through expanded healthcare partnerships.
  
• Efficiency programs and digital innovation are driving lower operating costs, faster drug development, and improved profitability, supporting leadership in mRNA-based therapeutics.
  
• Heavy reliance on COVID vaccines, regulatory setbacks, and weak demand for respiratory vaccines threaten revenue growth, margin stability, and future pipeline diversification.

Catalysts

A biotechnology company, provides messenger RNA medicines in the United States, Europe, and internationally.

• Moderna’s near-term pipeline is on the verge of substantial diversification, with up to ten product approvals targeted by 2028 across RSV, CMV, norovirus, and multiple cancer vaccine indications. This broadening into age-related diseases and oncology leverages growing demand from aging global populations and an increased investment in preventative care, creating the potential for significant revenue expansion as new multibillion-dollar markets open up.
  
• Regulatory approvals and potential inclusion in annual or seasonal vaccination schedules for products targeting RSV, CMV, and flu/COVID combinations are expected within the next one to three years. These address both a rapidly aging demographic and increased governmental focus on pandemic preparedness, which could lead to recurring, high-visibility vaccine revenue streams and contractual partnerships with health authorities, supporting top-line growth and long-term revenue stability.
  
• The oncology pipeline, particularly the individualized cancer vaccine Intismeran (in partnership with Merck) and the imminent Checkpoint program, positions Moderna to capture a share of the high-growth market for cancer immunotherapies. Leveraging its validated mRNA platform, positive early clinical data, and strategic partnerships, Moderna is set to generate both milestone and royalty income, driving higher future earnings and solidifying its leadership in platform-based therapeutics.
  
• Aggressive cost-reduction and manufacturing efficiency programs, including modular mRNA production and the completion of expensive Phase III trials by 2027, are projected to cut annual cash operating costs by over 50%—from $11 billion in 2023 to approximately $4.2 billion in 2027—significantly improving gross margins and supporting a return to cash flow breakeven by 2028, which will have a direct impact on net margins and earnings.
  
• Advancements in AI-enabled drug discovery, rapid response vaccine innovation enabled by evolving regulatory frameworks, and global healthcare digitization trends are expected to accelerate Moderna’s time-to-market for novel therapies. These secular industry trends will amplify the productivity of Moderna’s mRNA technology, increase the rate of pipeline monetization, and underpin both premium valuations and sustained long-term growth in earnings.

Moderna Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Moderna compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Moderna's revenue will grow by 39.6% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -105.7% today to 19.7% in 3 years time.
• The bullish analysts expect earnings to reach $1.7 billion (and earnings per share of $4.2) by about July 2028, up from $-3.4 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 34.3x on those 2028 earnings, up from -3.8x today. This future PE is greater than the current PE for the US Biotechs industry at 15.8x.
• Analysts expect the number of shares outstanding to grow by 0.61% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.4%, as per the Simply Wall St company report.

Moderna Future Earnings Per Share Growth

Risks

• Global healthcare budget constraints and increased price controls in major markets threaten Moderna’s ability to command high prices for its innovative vaccines, which could reduce long-term revenue and compress gross margins.
  
• Declining vaccination rates, continued transition of COVID to a routine seasonal market, and persistent resistance or skepticism towards vaccination are suppressing demand for respiratory vaccines and may limit Moderna’s future revenue growth and undermine earnings stability.
  
• Heavy reliance on COVID vaccine products and slow diversification of the pipeline into non-infectious diseases like oncology or rare diseases expose Moderna to significant revenue and earnings volatility, especially as pandemic-era demand subsides and competitors strengthen.
  
• Stringent regulatory requirements and shifting approval standards, as evidenced by the delay in flu/COVID combination vaccine approvals, increase the risk of setbacks, extended timelines, or outright rejections, potentially resulting in delayed product launches and negative impacts on both top-line revenue and net earnings.
  
• Persistent high R&D and commercialization costs, combined with uncertainty around the commercial performance of upcoming pipeline products, threaten net margins and could result in continued operating losses if anticipated launches or market uptake underperform expectations.

Valuation

• The assumed bullish price target for Moderna is $123.83, which represents two standard deviations above the consensus price target of $47.68. This valuation is based on what can be assumed as the expectations of Moderna's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $198.0, and the most bearish reporting a price target of just $20.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $8.6 billion, earnings will come to $1.7 billion, and it would be trading on a PE ratio of 34.3x, assuming you use a discount rate of 6.4%.
• Given the current share price of $32.66, the bullish analyst price target of $123.83 is 73.6% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.