In this article, I have evaluated two biotech stocks, Moderna, Inc. (MRNA) and Germany-based BioNTech SE (BNTX), to determine which has better upside potential. Based on the fundamental comparison of these stocks, I find BNTX a better pick for the reasons explained throughout this article.
The biotech market’s expansion is fueled by the rising number of initiatives undertaken by both businesses and government agencies, as well as the decreasing costs associated with genome sequencing. Additionally, the biotech sector’s heightened emphasis on discovering treatments for various rare diseases is expected to contribute significantly to its growth trajectory.
Moreover, the increasing prevalence of personalized medicine and the emergence of numerous orphan drug formulations are creating new opportunities for biotechnology. These factors are driving an influx of biotech companies, further bolstering the market’s revenue.
Data Bridge Market Research shows that the biotechnology market is expected to grow at a CAGR of 29% to reach $10.13 trillion by 2030.
Regarding price performance, BNTX has gained 6.6% over the past month, while MRNA has gained 2.9%. However, in terms of past year returns, BNTX has declined 12.9%, while MRNA has gained 6.3%.
Here are the reasons I think BNTX could perform better in the near term:
Latest Developments
On June 5, 2023, MRNA and Merck & Co. Inc. (MRK) announced distant metastasis-free survival results from the Phase 2b randomized KEYNOTE-942/mRNA-4157-P201 study, a clinical trial evaluating mRNA-4157 (V940), an investigational individualized neoantigen therapy (INT), in combination with KEYTRUDA, Merck’s anti-PD-1 therapy, in patients with resected high-risk melanoma (stage III/IV).
On the other side, on June 2, BNTX and OncoC4, Inc. announced positive preliminary data from the ongoing Phase 1/2 trial with the companies’ anti-CTLA-4 antibody candidate, BNT316/ONC-392 (gotistobart), in a patient cohort with metastatic, PD-(L)1-resistant non-small cell lung cancer.
The preliminary results show encouraging clinical anti-tumor activity for BNT316/ONC-392 as a monotherapy in a hard-to-treat patient population, as well as a manageable safety profile.
Moreover, on April 3, BNTX and Duality Biologics (Suzhou) Co. Ltd, a clinical-stage biotech company focusing on the discovery and development of next-generation antibody-drug conjugate (ADC) therapeutics to treat patients with cancer and autoimmune diseases, signed exclusive license and collaboration agreements.
The collaboration grants BioNTech global development, manufacturing, and commercialization rights for two ADC assets, excluding Mainland China, Hong Kong, and Macau. This partnership allows BioNTech to expand its oncology portfolio by incorporating ADCs to develop effective therapies for cancer patients at all disease stages.
Recent Financial Results
MRNA’s total revenue for the first quarter ended March 31, 2023, decreased 69.3% year-over-year to $1.86 billion. Its total operating expenses rose 21.2% year-over-year to $2.23 billion.
The company reported a loss from operations of $366 million, compared to an income of $4.23 billion in the year-ago quarter. Its net income and EPS came in at $79 million and $0.19.
Conversely, during the fiscal first quarter that ended March 31, 2023, BNTX’s total revenues came in at €1.28 billion ($1.40 billion). Net profit came in at €502.2 million ($548.35 million), while its earnings per share came in at €2.05.
Cash and cash equivalents, as of March 31, 2023, came in at €12.14 billion ($13.25 billion), compared to €6.14 billion ($6.70 billion) in the previous-year quarter.
Past and Expected Financial Performance
MRNA’s revenue grew at a CAGR of 560.8% over the past three years. The company’s EPS is expected to amount to $0.58 in the next fiscal quarter ending September 2023 and negative $2.36 in the current year. Its revenue is expected to come in at $305.56 million in the current quarter ending June 2023 and $7.21 billion in the current year.
On the other hand, BNTX’s revenue grew at a CAGR of 380.4% over the past three years. The company’s EPS is expected to amount to $1.16 in the next fiscal quarter ending September 2023 and $5.42 in the current year. Its revenue is expected to come in at $690.64 million in the current quarter ending June 2023 and $6.10 billion in the current year.
Profitability
BNTX is more profitable, with a gross profit margin and net income margin of 85.29% and 51.08%, respectively, compared to MRNA’s 39.82% and 31.77%.
Furthermore, MRNA’s ROCE, ROTC, and ROTA of 26.62%, 15.88%, and 19.83% are lower than BNTX’s 34.49%, 27.54%, and 28.25%, respectively.
Valuation
In terms of forward P/S, MRNA is currently trading at 6.80x, which is higher than BNTX’s 4.45x. Moreover, MRNA’s forward EV/S multiple of 4.69 is more elevated than BNTX’s 2.26.
So, BNTX is relatively affordable here.
POWR Ratings
MRNA has an overall rating of C, which equates to a Neutral in our proprietary POWR Ratings system. On the other hand, BNTX has an overall rating of B, which translates to a Buy. The POWR Ratings are calculated considering 118 distinct factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. BNTX has a grade of B for Quality. Its 85.29% trailing-12-month gross profit margin is 52.88% higher than the industry average of 55.79%. Its trailing-12-month EBIT margin of 65.97% is significantly higher than the industry average of negative 1.58%.
On the other hand, MRNA has a Quality grade of C. While its trailing-12-month gross profit margin of 39.82 is 28.6% lower than the industry average of 55.79%, its trailing-12-month EBIT margin of 32.05% is higher than the industry average of negative 1.58%.
Among the 386 stocks in the Biotech industry, MRNA is ranked #62, while BNTX is ranked #27.
Beyond what is stated above, we have also rated the stocks for Value, Growth, Momentum, Stability, and Sentiment. Click here to view all the MRNA ratings. Also, access all the BNTX ratings here.
The Winner
As the biotech sector enjoys inelastic demand for its products and services, it remains relatively stable in the face of economic uncertainty. Moreover, the biotech industry is poised for exponential expansion with rising government and private funding for rare disease research. While both MRNA and BNTX are expected to benefit, the latter could be the better pick due to its superior profit margins and discounted valuation multiples.
Our research shows that the 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.
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BNTX shares were trading at $108.51 per share on Wednesday morning, down $1.43 (-1.30%). Year-to-date, BNTX has declined -27.77%, versus a 14.51% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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