Is Moderna Stock a No-Brainer Buy After a Key FDA Win? |

After a significant slump following the height of the COVID-19 pandemic, Moderna (MRNA 10.83%) share prices have ripped higher over the past year, surging nearly 150%. Various factors have driven Moderna’s rebound, including regulatory progress on one of its most anticipated products.

Yet even as this news, plus additional promising announcements, suggests a further recovery ahead for this pandemic-era favorite, keep in mind how much of this “comeback potential” is already priced into one of the hottest biotech stocks.

Why Moderna is surging higher

On June 18, Moderna disclosed how a Food and Drug Administration (FDA) advisory committee voted unanimously that the benefits of its mRNA-based flu vaccine, mRNA-1010, outweigh the risks among patients aged 50 or over. The FDA could approve mRNA-1010 as soon as Aug. 5. The candidate is also currently under regulatory review in Australia, Canada, and the European Union.

Other news has also lifted sentiment. The company’s recent investor day also included a surprise announcement that it is gearing up to develop an in vivo CAR-T candidate. Success with this endeavor could help Moderna diversify into respiratory, oncology, and rare-disease treatments.

Tread carefully amid the hype

There’s substance to the market’s bullish shift on Moderna, but things have arguably gotten out of hand. After its hot run, the company now has a market cap of around $26.7 billion. As Moderna is currently unprofitable, this valuation is clearly based upon the future potential of its non-COVID-19 products. However, the estimated total addressable market for flu vaccines is only around $9.5 billion. Moderna will likely need to gain dominant market share for this to translate into sales and earnings that help justify the stock’s current valuation.

Even when factoring in future potential with CAR-T and other treatments, many of these early products remain years away from commercialization. In the meantime, as Moderna continues to burn through its cash position to fund its post-COVID-19 comeback, the company could be at increased risk of a dilutive equity offering. Even if you’re bullish on Moderna’s long-term rebound potential, you may want to wait until some of the latest hype fades before buying.

Thomas Niel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Moderna. The Motley Fool has a disclosure policy.