Moderna Stock Down 16% in February – Time to Buy MRNA Stock?

The price of Moderna stock has declined 16% in February as companies in the riskiest segments of the markets have continued to see their valuations shrink amid an expected shift in the macro landscape.

On 31 January, Moderna received full approval from the United States Food and Drug Administration (FDA) for individuals older than 18 years. The company has named its flagship COVID treatment SPIKEVAX.

According to the firm, a total of 70 countries have already granted the firm approval to administer its vaccine to individuals of different ages.

On 8 February, Moderna announced that it signed an agreement with the Colombian government to supply a total of 10.8 million doses of SPIKEVAX to be delivered progressively during the first three quarters of 2022.

Additionally, the company informed that it will be publishing its financial results covering the fourth quarter and entire 2021 fiscal year on 24 February.

Data compiled by Seeking Alpha indicates that the market’s consensus estimate for the firm’s revenue stands at $6.7 billion with the lowest estimate sitting at $5.5 billion and the highest at $7 billion.

Meanwhile, analysts have forecasted that Moderna will report adjusted earnings per share of $9.8 with the lowest estimate standing at $7.05 and the highest at $10.85 per share.

What could be expected from this COVID stock ahead of the release of its quarterly report? In this article, we will be assessing the price action and fundamentals of Moderna stock to outline plausible scenarios for the future.

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Moderna Stock – Technical Analysis

The price of Moderna (MRNA) stock has declined 44% since the year started while it stands more than 71% below its 52-week high of $497.5 per share. This indicates the extent to which the market’s sentiment toward the stock has shifted amid a confluence of negative catalysts.

The first of these catalysts is the appearance of multiple antiviral treatments against COVID including Pfizer’s PAXLOVID and Merck’s molnupiravir. People who refuse to take vaccines may now opt to take these treatments if they get ill instead of being inoculated and that could reduce the demand for Moderna’s vaccine faster than initially expected.

Additionally, upcoming changes in the policies adopted by central banks to contain the financial impact of the pandemic are increasing the risk premium and therefore reducing the valuation of equities.

In the past quarter, Moderna’s sales and earnings missed Wall Street’s estimates. If a similar situation occurs after this quarterly report is released, chances are that the downtrend could accelerate.

Yesterday, MRNA stock tagged a crucial area of support at $140 per share during a high-volume stock trading session that doubled the 10-day average with nearly 17 million shares exchanging hands during the day.

A break below this threshold could lead to a decline to the low 120s for a total downside risk of more than 15% in the near term.

According to data from the options market, traders are pricing a 15% fluctuation in the price of MRNA stock from now until next Friday after the company publishes its quarterly earnings report.

Moderna Stock – Fundamental Analysis

Moderna has only one approved treatment thus far – its COVID-19 vaccine. This product is responsible for generating 100% of the company’s revenues and fluctuations in the demand for this vaccine will determine how the valuation of the company behaves in the future.

The only other product that can produce revenues for the firm in the mid term is a vaccine against Cytomegalovirus that is currently undergoing Phase 3 trials.

Moderna’s sales are expected to climb to $21.5 billion in 2022 meaning that the company is currently trading at 2.7 times its forecasted sales for this year. Meanwhile, the firm’s adjusted EPS forecast for 2022 stands at $28.4 per share resulting in a forward P/E ratio of 5x.

Even though the company seems relatively cheap from a fundamental standpoint, the market seems to be concerned that its dependence on a single product whose demand is highly uncertain and possibly on track to decline in the future will eventually lead to negative growth rates for both revenues and earnings.

That said, Moderna has already proven that its mRNA technology can create feasible treatments against diseases in record time.

At its current valuation, the company could be trading at attractive multiples if one considers the value of its intellectual property, the cash flows that will still be generated by vaccine sales in the near term, and the available cash the company had by the end of previous quarter – around $15 billion or so.

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