Moderna Stock Up 14% in September – Time to Buy MRNA Stock?

The price of Moderna stock has surged 14% so far in September as multiple positive news from the vaccine front have lifted the valuation of the US-based biotech firm including an announcement concerning the development of a booster shot that will inoculate patients against both COVID and influenza.

Back on 9 September when news of this innovative treatment hit the trading floor, shares of Moderna rose as much as 8% to $456 per share. However, the stock has shed some of those gains amid a 2.4% retreat seen on Friday and another 3.3% downtick during today’s pre-market stock trading action.

As the Evergrande crisis in China continues to unfold, could a temporary drop in the price of Moderna present itself as an opportunity for buy-and-hold investors to get their hands on this pandemic winner at a lower entry?

In the following article, I’ll take a closer look at the firm’s fundamentals to possibly pinpoint how attractive things could get if we do get a correction in MRNA stock price.

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Moderna Stock – Technical Analysis

The price action on Moderna stock has been forming what seems to be a pennant pattern following the steep uptrend that started back in July after the company was successfully added to the prominent S&P 500 index.

So far this year, the stock has delivered gains of 311% to investors on top of last year’s remarkable 434% jump.

A pennant formation is considered a bullish continuation pattern that could lead to the resumption of the uptrend the precedes it. For Moderna, if this pattern unfolds as expected chances are that the stock could jump to the low 700s in the following months.

Friday’s session was quite interesting as Moderna shares sold off early in the day to a point that they were losing around 8% of their value. However, buyers showed up to buy the dip and managed to push the price higher to end the day with a milder 2.4% retreat.

Trading volumes during the day exceeded the daily average by two times and that shows that a strong buying interest exists for MRNA stock.

Momentum oscillators are currently stalled and not providing any directional signals on the daily time frame. Therefore, traders should wait to see if this pennant pattern unfolds as expected or if a break of the symmetrical triangle occurs amid the risk-off move prompted by the Evergrande situation in China.

Moderna Stock – Fundamental Analysis

Moderna sales experienced a significant leap last year after the company’s COVID-19 vaccine was granted emergency-use approval by the US Food and Drug Administration (FDA). Last year, top-line results landed at $803 million while the management has guided for total sales of around $20 billion for the 2021 fiscal year.

Gross margins for the firm have stood at around 70% in the past two quarters (the only profitable ones) while net margins have landed at around 64%. Based on that $20 billion forecast and its latest bottom-line profit margins, net income for the company should land at around $12.8 billion by the end of this year.

At its current market capitalization of $174 billion, the company is trading at an attractive forward P/E ratio of 10 times. This valuation reflects that market participants believe that 2022 will be the best year for Moderna as vaccine demand should progressively slow down in the subsequent fiscal periods.

This is reflected by sales estimates for 2023, which are anticipating a 46% year-on-year decline in the firm’s top-line results as demand by then may only come from newborns and boosters.

However, Moderna has already proven how effective its mRNA technology can be at developing treatments at an accelerated pace. Moving forward, the approval of other products currently in the company’s pipeline including its RSV vaccine, which was already granted Fast Track designation by the FDA for adults older than 60 years, and its flu vaccine may open up new revenue streams for the firm.

Meanwhile, even if sales drop to around $10 billion, the company’s profits would land at around $6.5 billion, in which case the firm is being valued at 27 times its forecasted earnings for that scenario.

Given the promising outlook for Moderna’s ground-breaking vaccine and treatment development technology, the current valuation still seems attractive as long as the biotech firm can keep pushing its products up the pipeline.

Therefore, any dips resulting from the potential ripple effects of the Evergrande crisis might be worth buying for those who have the stomach to tolerate some short-term volatility in the price.

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