Moderna Stock Down 6% in April – Time to Buy MRNA Stock?
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The price of Moderna stock is down 6% so far this month following rumors that certain organizations such as Covax have decided to stop purchasing more doses of the firm’s vaccines.
According to a Bloomberg report released yesterday, sources stated that the World Health Organization (WHO)-backed initiative declined to put an order for millions of doses of Moderna (MRNA) that were supposedly going to be distributed among less favored countries throughout the world in the third and fourth quarter of the year.
Moreover, the report stated that the African Union, an important multi-lateral body in the region comprised of 53 member states, has also declined to purchase an additional 60 million doses from the company that were expected to be shipped during the second quarter of 2022.
Market participants reacted negatively to the news as the price declined 6% during yesterday’s stock trading session. For Moderna, waning demand for COVID vaccines amid the progressive development of herd immunity and the introduction of antiviral COVID treatments such as Pfizer’s PAXLOVID™ are some of the negative catalysts that may affect the company’s valuation.
On the other hand, a recent surge in the number of virus cases in China could offset these concerns depending on the government’s ability to contain the spread before it gets out of hand.
What could be expected from this biotech stock considering some of the scenarios cited above? In this article, I’ll be assessing the price action and fundamentals of MRNA stock to share some plausible predictions for the future.
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Moderna Stock – Technical Analysis
The price of Moderna stock has declined 37% so far in 2022 as some of the negative catalysts mentioned above have weighed on the market’s perspectives for the company for the next couple of years.
Moreover, the price is trading 68% below its 52-week high and 41.6% below the 200-day simple moving average.
The latest uptick caused by news about a surge in virus cases in China did not manage to push the price above the $195 level highlighted in the chart. In fact, a climb above this threshold was rejected twice.
Momentum indicators are now on a downtrend following this rejection with the Relative Strength Index (RSI) moving below 50 (bearish) while the MACD has now dropped below the signal line at the same time histogram readings have turned negative.
Moving forward, the $145 and $120 level remain key supports to watch if this downtrend accelerates. If China manages to rapidly contain the spread of the virus in the country, chances are that Moderna stock will experience further declines in the next few weeks.
Moderna Stock – Fundamental Analysis
In February this year, Moderna reported its financial results covering the entire 2021 fiscal year. Following what has been the best year for its business on the back of vaccine sales, the biotech firm said that it has received firm orders for vaccine deliveries in 2023. However, the firm did not provide a sales estimate for the year or even for the first quarter of 2022.
Thus far, the market’s consensus estimate for the firm’s revenues and adjusted earnings per share for 2022 stands at $22 billion and $27.49 per share respectively. This results in forward P/S and P/E ratios of 3x and 6x respectively.
Moving forward, the potential approval of other treatment’s within Moderna’s pipeline and the potential contribution of these other drugs to the firm’s top-line and bottom-line performance will have a significant influence on its valuation.
Three treatments stand out in terms of their advance toward reaching the last stage of their development and potential approval from the FDA. These include flu, Zika, and CMV vaccines being developed by Moderna. Any positive news regarding these drugs may lead to sizable fluctuations in the price of the stock.
Finally, by the end of December last year, Moderna reported total cash and equivalents of $17.6 billion. This is more than enough firepower to push forward any promising drug while the management has already proven its ability to execute rapidly whenever a treatment gets the nod from regulators.
With this in mind, Moderna might be an undervalued biotech giant and a potentially rewarding long-term play due to its robust technology to develop feasible treatments for some of the world’s most challenging diseases.
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