Vaccines have proven their life-saving power, especially during the COVID-19 pandemic – a testament to the science’s ability to save billions of lives and restore normalcy. Vaccines combat various diseases, from influenza to cancer, underscoring their vital role in global health.
Behind these trailblazing breakthroughs, companies like Eli Lilly and Company (LLY) and Moderna, Inc. (MRNA) are at the forefront of this revolution - Lilly with groundbreaking treatments in diabetes and obesity and Moderna as a pioneer in mRNA technology.
Yet, even these giants are not immune to setbacks. Eli Lilly saw its stock dip after a weak Q3 report, despite promising Phase 3 data for tirzepatide in heart failure. Moderna also stumbled as political uncertainty around Robert F. Kennedy Jr.'s appointment to a key healthcare role triggered a stock slump.
Despite these drops, analysts project significant upside potential for these stocks. With both LLY and MRNA down from their YTD highs, investors might view this as a chance to jump on the wave of future medical innovations, betting on the resilience and potential of these pharma powerhouses.
Vaccine Stock #1: Eli Lilly
Founded in 1876, Eli Lilly and Company (LLY), the Indianapolis-based firm is a global pharmaceuticals leader. Known for game-changing drugs like Trulicity, Humalog, and Mounjaro for diabetes, along with Zepbound for weight loss, Lilly is shaping healthcare’s future. With cutting-edge work in RNA and DNA therapies, its Boston Seaport Innovation Center leads breakthroughs, while partnerships continue to fuel advancements in cancer, arthritis, and mental health treatments.
Eli Lilly's shares have taken a hit, dropping 23% from its YTD high of $972.53 and falling nearly 20% over the past month. Much of this downturn followed its Q3 earnings miss on Oct. 30. Adding to the pressure, on Nov. 14, Lilly sued the Health Resources and Services Administration (HRSA) over its rejection of Lilly's cash replenishment model for reimbursing entities covered by the 340B Drug Pricing Program. Despite these challenges, the stock is up 28.6% YTD.
LLY is currently priced at 57.26 times forward earnings and 14.86 times sales, trading at a premium to its industry peers. This reflects investor confidence in its strong growth prospects.
Eli Lilly has been delivering steady dividends for over three decades, with 10 years of consistent increases. On Oct. 28, the pharma powerhouse announced a $1.30 per share quarterly dividend, payable on Dec. 10. With an annualized payout of $5.20 per share, Lilly’s 0.71% yield reflects both its commitment to investors and its solid earnings base, proving it is not just about breakthrough treatments, but long-term shareholder value.
Shares of Eli Lilly tumbled 6.3% after its disappointing Q3 earnings report on Oct. 30. Sales climbed 20% year over year to $11.4 billion, lagging behind Wall Street’s forecasts for $12.1 billion. Although Eli Lilly earned an adjusted EPS of $1.18, it widely missed expectations of $1.52.
The core issue was that Lilly’s star products, tirzepatide-based Mounjaro and Zepbound, didn’t hit the high notes. Mounjaro soared 121% to $3.11 billion but still missed forecasts. Zepbound brought in $1.26 billion, far below the expected $1.73 billion, mainly due to inventory hiccups.
On top of that, Lilly slashed its fiscal 2024 guidance. Revenue projections now sit between $45.4 billion and $46 billion, with adjusted EPS forecast between $13.02 and $13.52. Despite the setbacks, Lilly is pushing forward, ramping up tirzepatide production and planning more market expansions. The company’s focus on balancing supply and demand could set it up for a strong rebound in the coming quarters.
Analysts predict Eli Lilly’s EPS to more than double to $13.21 in fiscal 2024, with the bottom line projected to surge another 79.5% to $23.71 per share in fiscal 2025.
Tirzepatide Sparks Hope for Lilly’s Future
Eli Lilly dropped game-changing news on Nov. 16, revealing tirzepatide’s breakthrough results in the SUMMIT Phase 3 trial. Not only did it cut heart failure risks by 38%, but it also delivered significant improvements in heart failure symptoms and physical limitations. Patients saw major strides in exercise capacity, weight loss, and inflammation reduction. With regulatory submissions already in motion, Lilly is on track to redefine treatment for HFpEF and obesity, positioning tirzepatide as a potential new standard of care.
LLY stock has a consensus “Strong Buy” rating overall. Out of the 25 analysts covering the stock, 21 suggest a “Strong Buy,” one recommends a “Moderate Buy,” and the remaining three analysts maintain a “Hold” rating.
The mean price target of $1,015.58 suggests that LLY stock has an upside potential of 35.4% from today’s close.
Vaccine Stock #2: Moderna
Moderna, Inc. (MRNA), founded in 2010 and headquartered in Cambridge, Massachusetts, is a biotech pioneer with a $14.2 billion market cap. Renowned for its mRNA technology, Moderna revolutionized global health during the pandemic with its COVID-19 vaccine.
Its pipeline spans vaccines for respiratory, latent, and infectious diseases alongside groundbreaking cancer and rare disease therapies. With strategic partnerships ranging from AstraZeneca (AZN) to the Gates Foundation, Moderna continues to innovate, leveraging its platform to address some of the world’s most pressing health challenges.
Moderna soared to fame during the pandemic, pioneering a game-changing vaccine that helped the world navigate COVID-19’s darkest days. However, the company’s meteoric rise met gravity as vaccine demand waned, and so did its revenues.
Since peaking just shy of $500 in 2021, MRNA stock now trades over 77% below its YTD high of $170.47, with a steep 50% drop over the past year and 55% in just three months. This sharp correction presents a potential buy-the-dip opportunity, as Moderna expands its pipeline and forges ahead with groundbreaking biotech innovations.
In terms of valuation, the stock is trading at 4.32 times sales, which is lower than its healthcare sector average of 3.67x and its own five-year average multiple of 60.80x.
On Nov. 7, Moderna reported a solid Q3 earnings beat, with revenue rising 4% year-over-year to $1.9 billion - driven by strong product sales, which accounted for 95% of the total. The boost came from a surge in U.S. sales following the early launch of the updated COVID-19 vaccine and $10 million in respiratory syncytial virus (RSV) vaccine sales, marking a key step in its expanding pipeline. Its EPS hit $0.03, a remarkable turnaround from last year’s $9.53 loss per share, surpassing analysts’ expectations.
However, the stock dipped nearly 3%, reflecting investor concerns. RSV vaccine sales fell short of projections due to approval delays and competitor inventory buildup. International sales lagged, affected by deferred orders from 2022, with a forecasted dip in 2025 before an uptick in fiscal 2026. Additionally, heightened competition in the U.S. COVID-19 market and ongoing legal battles, like the lawsuit with GSK, add further pressure.
Leveraging its mRNA expertise, the company is expanding its pipeline with promising innovations. It is advancing a combination COVID-19 flu shot, which shows strong results without compromising safety. A personalized cancer vaccine, developed in partnership with Merck (MRK), is entering phase 3 trials while numerous other programs are progressing. Moderna’s pipeline signals a new era of mRNA breakthroughs on the horizon.
Moderna’s management remains optimistic for fiscal 2024, projecting net product sales between $3 billion and $3.5 billion from its respiratory franchise. R&D expenses are expected to range between $4.6 billion and $4.7 billion, while capital expenditures are anticipated to rise to $1.2 billion, driven by the purchase of the Norwood campus. Plus, Moderna aims for 10 product approvals over the next three years, positioning itself for continued growth and innovation.
Analysts expect the company’s losses to narrow 23.4% annually to $9.44 per share in fiscal 2024 and then another 7.8% in fiscal 2025.
Kennedy's Appointment Triggers Concerns
MRNA stock dipped after RFK Jr.’s nomination as HHS Secretary, sparking concerns over his proposed FDA overhaul. Kennedy, critical of the agency’s industry-funded budget, aims to curb pharmaceutical influence and enhance transparency. While reforms could restore public trust, they threaten longer approval timelines and higher costs, challenging companies reliant on regulatory stability.
For Moderna, dependent on FDA clearance, these shifts could hinder innovation and profitability. However, proponents argue that stricter oversight may level the playing field, benefiting smaller biotech firms. As Kennedy reshapes the FDA’s future, balancing accountability with efficiency remains a critical challenge for the industry.
Recently, Piper Sandler trimmed MRNA’s price target to $69 from $115, but kept an “Overweight” rating. Despite hitting a 52-week low amid declining COVID vaccinations, mRESVIA challenges, and RFK Jr.'s nomination, Piper views the dip as a compelling entry point for investors eyeing Moderna’s long-term growth potential in mRNA innovation.
Among the 24 analysts covering MRNA stock, the consensus rating is a “Hold” - a downgrade from the “Moderate Buy” rating just three months ago. The current outlook is based on six analysts recommending a “Strong Buy,” 15 advising a “Hold,” and the remaining three suggesting a “Strong Sell.”
The mean price target of $83.48 for MRNA suggests more than 112% upside potential from the current levels.
