At the end of last year, I wrote that analysts’ earnings projections for Moderna (NASDAQ:MRNA) were $9.46 per share for 2021. Now those same analysts have average earnings per share (EPS) forecasts of $30.12 for 2021, or over 3 times the prior numbers. I wrote that MRNA stock was worth $180. But as of Friday, Sept. 17, it was at $430.05. Analysts’ projections were way off.

I think they could still be significantly lower than what will turn out to be the case. As a result, MRNA stock could still have plenty of upside from here.

The stock has already peaked at $484.47 on Aug. 9. That means that it need only rise 12.65% to reach its previous peak. That is likely to happen sometime over the next year.

Where Things Stand

On Aug. 5, Moderna reported its Q2 earnings. One of the highlights in the results was the fact that its Phase 3 COVE study shows 93% efficacy and lasts for six months after the second dose. This seems to imply that Americans might need to take annual booster shots. However, recently the CDC director Dr. Rochelle Walensky suggested that a third shot may sufficiently strengthen the long-term protection from Moderna’s vaccine.

However, assuming that a certain percentage of those that took Moderna’s vaccine would also take a booster every several years is reasonable. This could continue to bring long-term revenue contracts to the company.

In fact, Moderna reported Q2 total revenue of $4.4 billion, net income of $2.8 billion and diluted EPS of $6.46. The company produced an astounding free cash flow of almost $7 billion ($6.95 billion) during the first six months ending June. That represents a huge percentage of revenue, over 100%. That is possible because of grants, government payments to the company and because it doesn’t book all contract revenue right away.

Balance Sheet and Cash Flow

For example, the company’s balance sheet now has $7.3 billion in deferred revenue that it expects to book as revenue during the next year. Its cash and investments balance is already $12.197 billion. Assuming it makes another $6 to $7 billion in cash flow for the next several years, the cash balance could rise to $30 billion, or almost 18% of its $173.9 billion market capitalization.

This is why analysts now estimate that revenue this year will top $20.35 billion and a similar amount ($20.33b) next year. But, of course, all bets are off, if Americans and other countries mandate an annual booster shot. Moreover, the company is also developing joint flu/Covid-19 vaccines, probably for older people.

Even if we assume that only 50% of revenue comes through as FCF over the next several years, that will result in at least $10 billion in FCF. We can use this to value the MRNA stock.

What MRNA Stock Is Worth

For example, if we assume that the market eventually values MRNA stock at a 5% FCF yield (the same as 20 times FCF), then it is worth $200 billion. That is 15% higher than Sept. 17’s market value of $173.9 billion. This implies a target price of $494.56 per share.

But assuming that revenue climbs 20% and the market values MRNA stock with a 4% FCF yield, the implied target value could be $300 billion, or 72.5% higher. This is seen by dividing $12 billion in FCF by 0.04. This implies a price target of $741.84.

So the real value of the stock is probably somewhere in between, with a mid-point expected value of $618.20, or 43.75% higher than Sept 17’s price.

What to Do With MRNA Stock

Most analysts are not as sanguine on MRNA stock as I am. Thirteen analysts now have an average price target of $312.08 per share or 27% below Sept 17’s price, according to Yahoo! Finance. They publish the data from Refinitiv analyst surveys.

In addition, Seeking Alpha‘s survey of 16 analysts shows that their average price target is $306.23, or 28.8% below Sept 17’s market price of $430.05. TipRanks.com indicates that 14 analysts who’ve written on MRNA stock in the last 3 months have an average price of $328 per share. That is 23.7% lower.

So, if you believe the analysts, don’t buy the stock. But all you have to do is look at the balance sheet and see that the company already has $7 billion of its projected $20 billion in sales on the books. Any new sales on top of its forecast rates will likely go at least 50% straight to free cash flow. That implies that this company is going to be significantly more. I project that MRNA will rise at least 44% to $618.20 per share.

On the date of publication, Mark R. Hake did not (either directly or indirectly) own any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.