With the business potentially at an important milestone, we thought we’d take a closer look at Moderna, Inc.’s (NASDAQ:MRNA) future prospects. Moderna, Inc., a clinical stage biotechnology company, develops therapeutics and vaccines based on messenger RNA for the treatment of infectious diseases, immuno-oncology, rare diseases, and cardiovascular diseases. With the latest financial year loss of US$514.0m and a trailing-twelve-month loss of US$487.4m, the US$26b market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Moderna’s path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company’s growth and when analysts expect it to become profitable.
Moderna is bordering on breakeven, according to the 14 American Biotechs analysts. They expect the company to post a final loss in 2020, before turning a profit of US$674m in 2021. Therefore, the company is expected to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 48% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Moderna’s growth isn’t the focus of this broad overview, however, bear in mind that by and large biotechs, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we’d like to point out is that Moderna has no debt on its balance sheet, which is rare for a loss-making biotech, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on Moderna, so if you are interested in understanding the company at a deeper level, take a look at Moderna’s company page on Simply Wall St. We’ve also compiled a list of relevant factors you should further examine:
- Valuation: What is Moderna worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Moderna is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Moderna’s board and the CEO’s background.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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