Moderna: Fair Value Lowered on ‘Hostile’ FDA Environment

This analysis was originally published as a stock note by Morningstar Equity Research.

Key Morningstar Metrics for Moderna

• Fair Value Estimate: USD 85
• Morningstar Rating: ★★★★★
• Morningstar Economic Moat Rating: None
• Morningstar Uncertainty Rating: Very High

Moderna Stock Update

Since Robert F. Kennedy Jr. was confirmed as secretary of the Department of Health and Human Services on Feb. 13, recent disruptions at the Food and Drug Administration include a return-to-office mandate, massive layoffs, and the resignation of top vaccine official Peter Marks on March 28.

Why it matters: Moderna’s covid vaccine was ushered to the market under the watch of Marks, and his departure could signify that Kennedy’s personal skepticism of vaccines is making its way into FDA policy and product reviews.

Moderna is expecting two approvals in the near term for a next-generation covid vaccine (May 31) and expanded approval of an RSV vaccine in high-risk adults (June 12), and the mRNA firm will need FDA support for six additional potential approvals by the end of 2027.

Beyond policy, Kennedy’s plan to begin a study of vaccines and their potential link to autism (already heavily studied and disproven) could further erode society’s confidence in vaccines, although we think falling vaccination rates could be self-correcting if outbreaks become more common.

The bottom line: We’re lowering our fair value estimate for no-moat Moderna to $85 per share, down from $102, after lowering our sales assumptions for its RSV vaccine and reducing the probability of approval for its covid/flu vaccine, incorporating regulatory risk on label expansion (RSV) and approval (covid/flu).

Even with this haircut to our sales estimates, Moderna still trades at a dramatic discount to our valuation. We think the market is failing to incorporate the value of Moderna’s mRNA technology and deep pipeline across vaccines, cancer, and rare disease therapeutics.

Bears say: Beyond potentially tougher vaccine approvals and slower review times across products, Moderna could see pressure stemming from changes to liability protection for its covid vaccine. If Kennedy were to remove such protections, lawsuits could emerge from individuals who believe they were harmed by the vaccine.