Moderna, Inc. (MRNA) in Cambridge, Mass., develops therapeutics and vaccines based on messenger RNA to treat infectious, immuno-oncology, rare, cardiovascular, and auto-immune diseases internationally. In comparison, Novavax, Inc. (NVAX) in Gaithersburg, Md., focuses on discovering, developing, and commercializing vaccines to prevent serious infectious diseases and address health needs.
The biotech industry has witnessed steady growth amid the global healthcare crisis thanks to its effectiveness in helping the world fight against the deadly coronavirus through vaccines and treatments. In addition, resurgence of COVID-19 cases around the world could lead to further interest in the industry. Also, biotech companies’ increased focus on finding cures for other rare diseases should help the sector expand tremendously.
According to a report by Vision Research Reports, the global biotechnology market is expected to grow at a 16.8% CAGR through 2030. Therefore, both MRNA and NVAX should benefit.
Click here to checkout our Healthcare Sector Report for 2022
But which of these two stocks is a better buy now? Let’s find out.
Latest Developments
On April 19, 2022, MRNA announced new clinical data on its bivalent COVID-19 booster platform, including data on its first bivalent booster candidate, mRNA-1273.211. Stéphane Bancel, CEO of MRNA, said, "Our latest bivalent booster candidate, mRNA-1273.214, which combines the currently authorized Moderna COVID-19 booster with our Omicron-specific booster candidate, remains our lead candidate for the fall 2022 Northern Hemisphere booster.”
On April 21, 2022, NVAX announced initial results from the Phase 1/2 clinical trial of its COVID-Influenza Combination Vaccine. The CIC combines Novavax' COVID-19 vaccine, NVX-CoV2373, and its quadrivalent influenza vaccine candidate. The CIC trial demonstrated that formulating the combination vaccine is feasible, well-tolerated, and immunogenic.
Recent Financial Results
MRNA’s revenue increased 1,162.9% year-over-year to $7.21 billion for the fiscal fourth quarter ended December 31, 2021. The company’s net income came in at $4.87 billion compared to a loss of $272 million in the prior-year quarter. Also, its EPS came in at $11.29 compared to a loss of $0.69 in the year-ago period.
NVAX’s revenues decreased 25.9% year-over-year to $222.20 million for the fiscal fourth quarter ended December 31, 2021. The company’s net loss came in at $846.28 million, representing a 376.6% year-over-year increase. Also, its loss per share came in at $11.18, up 314.1% year-over-year.
Past and Expected Financial Performance
MRNA’s revenue and total assets grew at CAGRs of 415.2% and 132.5%, respectively, over the past three years. Analysts expect MRNA’s revenue to increase 41.3% for the quarter ending September 30, 2022, and 20.9% in fiscal 2022. The company’s EPS is expected to decline 14.3% for the quarter ending June 30, 2022, and 2.1% in fiscal 2022.
On the other hand, NVAX’s revenue and total assets grew at CAGRs of 222.1% and 131.4%, respectively, over the past three years. The company’s revenue is expected to increase 567.3% for the quarter ending September 30, 2022, and 291.4% in fiscal 2022. Its EPS is expected to grow 212.8% for the quarter ending June 30, 2022, and 202% in fiscal 2022.
Profitability
MRNA’s trailing-12-month revenue is 16.06 times what NVAX generates. MRNA is more profitable, with a gross profit margin and net income margin of 75.05% and 66.06%, respectively, compared to NVAX’s negative returns.
Furthermore, MRNA’s ROE, ROA, and ROTC of 146.08%, 51.93%, and 93.06% compared to NVAX’s negative values.
Valuation
In terms of forward non-GAAP P/E, MRNA is currently trading at 5.42x, 117.7% higher than NVAX’s 2.49x. Moreover, MRNA’s forward EV/S ratio of 2.01x is 183.1% higher than NVAX’s 0.71x.
So, NVAX is relatively affordable here.
POWR Ratings
MRNA has an overall rating of B, which equates to a Buy in our proprietary POWR Ratings system. On the other hand, NVAX has an overall rating of C, which translates to Neutral. The POWR Ratings are calculated considering 118 distinct factors, with each factor weighted to an optimal degree.
MRNA has a grade of A for Quality. This is justified given MRNA's 71.98% trailing-12-month EBIT margin, significantly higher than the industry average of 1.06%. On the other hand, NVAX has a Quality grade of C, in sync with its negative trailing-12-month EBIT margin, compared to the industry average of 1.06%.
Of the 401 stocks in the Biotech industry, MRNA is ranked #20. In comparison, NVAX is ranked #73.
Beyond what I have stated above, we have also rated the stocks for Value, Growth, Momentum, Stability, and Sentiment. Click here to view all the MRNA ratings. Also, get all the NVAX ratings here.
The Winner
The biotech industry is expected to grow exponentially with increasing government and private funding support for finding cures for rare diseases. While both MRNA and NVAX are expected to gain, it is better to bet on MRNA now because of its higher profit margin and robust financials.
Our research shows that odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the other top-rated stocks in the Biotech industry here.
Click here to checkout our Healthcare Sector Report for 2022
MRNA shares were trading at $144.50 per share on Thursday afternoon, down $5.62 (-3.74%). Year-to-date, MRNA has declined -43.11%, versus a -7.48% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.
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