Moderna Stock Up 8% Today – Time to Buy MRNA Stock?

The price of Moderna stock is up 8% so far this morning in pre-market stock trading action following positive news about the efficacy of the company’s vaccine against the omicron variant of the COVID-19 virus.

In a statement released this morning, the company announced preliminary data on the impact of booster shots to protect individuals against the variant, stating that an additional 50 µg dose of mRNA-1273 increased antibody levels by 37-fold while a 100 µg of the same vaccine increased such protection 83-fold compared to pre-booster levels.

“The dramatic increase in COVID-19 cases from the Omicron variant is concerning to all. However, these data showing that the currently authorized Moderna COVID-19 booster can boost neutralizing antibody levels 37-fold higher than pre-boost levels are reassuring”, stated Stéphane Bancel, Moderna’s Chief Executive Officer.

Even though the data is encouraging, it is important to note that the findings came from a small trial comprised of 20 booster recipients. The trial was conducted in a laboratory established by the National Institute of Allergy and Infectious Diseases (NIAID).

The firm further stated that its mRNA-1273 remains its “first line of defense” against this new variant, meaning that the company will not have to modify or develop a new treatment.

What can be expected from this biotech stock following today’s news and only a few days before we enter a new year? In this article, I’ll be assessing the price action and fundamentals of MRNA stock to outline plausible scenarios for the future.

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Moderna Stock – Technical Analysis

Back in October when I last wrote about Moderna stock, I highlighted that the bounce that occurred back then could be short-lived as momentum oscillators were quite depressed and that created room for such a phenomenon.

The stock’s early-November decline ended up validating that outlook as Moderna stock experienced two sharp drops of 17% and 16% back then following news about Pfizer’s COVID-19 pill and the publication of Moderna’s Q3 2021 earnings report.

For Moderna, the launch of this antiviral treatment from one of its top competitors remains a threat to its business model as the company currently produces revenues solely from the sale of its COVID-19 vaccine.

The stock recovered shortly afterwards after news about the appearance of the omicron variant started to circulate but they gave up most of those gains later as concerns about the efficacy of vaccines dominated the narrative.

The price action lately for MRNA stock has been quite choppy and that increases risks for both traders and investors as the company’s future financial performance is heavily tied to how the virus situation evolves.

Today’s pre-market uptick is pushing the price of Moderna stock above its short-term moving averages. Prior to today’s action, momentum indicators were starting to show positive signs as the Relative Strength Index (RSI) moved to 52 (bullish) while the MACD seems poised to cross above the signal line.

For now, the outlook for MRNA stock is bullish as the price will climb further above the 200-day simple moving average. A first target for the stock could be set at $360 per share since that would be the next resistance to overcome for this biotech stock. If this target is hit, that would result in a potential 22% gain based on last Friday’s closing price.

Moderna Stock – Fundamental Analysis

For the full year 2021, Moderna’s management shared revenue guidance of $15 to $18 billion. Meanwhile, for next year, the company expects that sales could land somewhere between $17 to $22 billion.

This 2022 expected range results in a forward price-to-sales ratio ranging from 5.5x to 7x based on last Friday’s total market capitalization of $119.5 billion for the firm.

However, analysts are expecting a significant decline in the firm’s top-line results in 2023 and 2024 as vaccine sales will likely diminish. These pessimistic scenarios for the firm explain why the stock is trading at only 9 times its forecasted earnings per share for the next 12 months.

Meanwhile, the release of Pfizer’s and Merck’s COVID pill is also threatening to derail Moderna’s financial performance in the future as those who refuse to take a vaccine may opt for taking the pill instead if they contract the disease.

Whether the current valuation is justified or not is difficult to estimate as the firm’s future performance is heavily tied to the highly unpredictable path of the pandemic.

That said, from 2025 and forward, analysts are expecting that the firm will start to generate revenues from other approved mRNA-based treatments and vaccines. Based on the estimates for the year before, when the post-pandemic earnings decline is supposed to reach a bottom, the price of the stock is currently trading at 17 times the EPS forecasted by analysts for that period (around $7.7 per share).

If things play out as expected, the company could be a heavily undervalued long-term pick. However, multiple assumptions were made to draft those forecasts and things could turn out to be quite different than what analysts expect – for better or for worse.

With this in mind, the price of Moderna may remain quite volatile as the market will have to adjust its valuation for the firm many times in the future to price any new developments that shape the company’s financial performance as the world progressively steps out of the pandemic.

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