Moderna stock is on a tear in 2020 with a near eightfold gain for the year as of mid-December. And it seems the Food and Drug Administration is ready to authorize the company’s coronavirus vaccine.
The biotech company is a frontrunner in the race for a coronavirus vaccine. Late last month, Moderna (MRNA) asked the Food and Drug Administration to authorize its drug for emergency use. It’s also seeking approvals in Europe and other countries. This would be Moderna’s first commercial product.
Moderna also trails Pfizer (PFE) and BioNTech (BNTX), which are now authorized to distribute their coronavirus vaccine in the U.S., U.K. and Canada. These drugs hijack the body’s natural process for making proteins known as messenger RNA.
Shares of Moderna stock hit a record high on Dec. 1 after the company said its coronavirus vaccine was 94.1% effective in a Phase 3 test. In comparison, Pfizer and BioNTech say their coronavirus drug proved to be 95% effective in final-phase testing.
Moderna has several supply agreements for its coronavirus vaccine. In December, it agreed to sell Switzerland 7.5 million doses. Canada is buying 40 million doses. The Israeli government secured 6 million doses. The U.S. has bagged 200 million doses with an option for up to 300 million more.
Moderna agreed to supply the U.K. with 7 million doses, the European Commission with 80 million doses and Japan with 50 million doses. It also has deals with Qatar, Singapore, Switzerland and Israel.
So, is MRNA stock a buy now amid its coronavirus vaccine efforts?
A Fundamental Look At Moderna Stock
First, it’s important to note that Moderna doesn’t yet sell any commercial products.
The biotech company is banking on its promising messenger RNA, or mRNA, technology. Messenger RNA is a substance in the body that delivers the instructions for creating protein.
The type of coronavirus that causes Covid-19, dubbed SARS-CoV-2, is covered in so-called spike proteins. Moderna’s coronavirus vaccine contains mRNA that tells the body to produce a structure similar to the spike protein. The idea is that this will trigger the immune system to create disease-fighting antibodies and T-cells.
But the theory, while promising on many fronts, isn’t yet proven commercially. Moderna isn’t profitable. So far, the company has reported losses every year since its start in 2016. Further, Moderna’s revenue is variable and depends on collaboration revenue and grant money.
This takes MRNA stock out of the CAN SLIM threshold. Savvy investors are advised to seek stocks with recent 20%-25% quarterly sales and earnings growth. The bigger that growth, the better. It will be key to watch whether Moderna’s efforts to develop a coronavirus vaccine ultimately pay off on the bottom line.
In the third quarter, Moderna reported a 55-cent per-share loss on $157.9 million in revenue. That follows a 37-cent loss and $17 million in sales in the year-ago period. For the fourth quarter, analysts polled by FactSet expect a 55-cent loss per share and $223 million in sales.
Moderna stock has a Composite Rating of 80 out of a best-possible 99. The Composite Rating is a 1-99 measure of a stock’s key fundamental and technical measures. So, Moderna stock ranks among the top 20% of all stocks on those metrics.
What Does 2019 Say About MRNA Stock?
Moderna stock went public at 23 in late 2018.
In 2019, the biotech stock popped about 38%. In 2020, shares had rocketed nearly 679% as of midday action on Dec. 15.
Still, the bullish Moderna stock action does not extend to fundamental measures. In 2019, Moderna reported a loss of $1.55 per share on $60 million in sales. Losses have deepened each year of its four full years, and revenue has declined for two years now.
This year, analysts surveyed by FactSet expect losses of $1.77 a share, down from $1.56 in 2019. The Street calls for $450 million in revenue, skyrocketing 650% year over year. In 2021 and beyond, analysts expect Moderna to be solidly profitable with rapidly accelerating revenue.
Moderna Stock: Technical Analysis
Following its bullish coronavirus vaccine news on Nov. 16, Moderna stock broke out in strong volume. The biotech stock topped a buy point at 95.31 out of a consolidation, according to MarketSmith.com.
Shares touched a record high that day, at 100.13, but quickly faced resistance and began sinking below their breakout point. However, investors could also look for an advanced buy point at 81.47, given that Moderna had overcome upside resistance near the key 80 price level in the week ended Nov. 13.
Moderna stock later smashed that record on the last three trading days in November. Shares hit a new record again on Dec. 1, but quickly toppled on news Merck (MRK) had divested its equity investment in MRNA stock. Shares tumbled on an analyst downgrade on Dec. 9.
Advances by other Covid-19 vaccine makers also have occasionally weighed on Moderna stock. In September, AstraZeneca (AZN) paused its Phase 3 Covid-19 vaccine testing when a participant became seriously ill. The study restarted in October, however.
Signing A Pledge
Moderna and AstraZeneca are among nine leading Covid-19 vaccine makers who signed a pledge to follow sciences and safety in their development efforts. This came as U.S. and other political leaders ratcheted up calls for a vaccine as soon as possible to help troubled economies and sooth social unrest.
Moderna stock fell 13% on Sept. 8 to a four-month low after Moderna signed that pledge. Investors should be wary. It will be key to watch for regulatory and commercial proof of its technology, as well as strong fundamental and technical markers.
Bullishly, MRNA stock has a strong Relative Strength Rating of 99. The RS Rating is a 1-99 score of a stock’s 12-month performance. This puts Moderna in the top 1% of all stocks — regardless of industry group — in terms of performance.
But Moderna stock has a poor EPS Rating of 20, reflecting years of continuing per-share losses.
(RELATED: Keep tabs on Investor’s Business Daily ratings each day by visiting IBD Digital.)
Coronavirus Vaccine News On MRNA Stock
Moderna set a record in early 2020 when it created an experimental coronavirus vaccine within 42 days of receiving the virus’s genetic sequence from researchers in China. The National Institute of Allergy and Infectious Diseases ran the Phase 1 study in healthy volunteers.
That news sent MRNA stock up almost 28% on a single day in February.
In mid-March, MRNA stock surged more than 15% after the biotech company said it had dosed the first participant in a Phase 1 study of the coronavirus vaccine. This was Moderna’s 10th infectious disease vaccine to begin a clinical study.
Moderna stock jumped on May 18 after the biotech company said its coronavirus vaccine showed positive interim results in the Phase 1 test. Researchers tested the vaccine in participants age 18-55.
All participants developed antibodies against SARS-CoV-2 two weeks after receiving a second shot of the low-dose vaccine. The midsize dose produced even more antibodies. But Moderna stock fell more than 10% the next day after the biotech announced a public stock offering.
On July 14, Moderna unveiled additional “robust” data from that same study. Notably, the midsize dose generated 2.1 times to 4.1 times the neutralizing antibodies seen in recovered Covid-19 patients. Moderna is planning to study that dose size in a late-stage test.
Phase 3 Test Proves 94.1% Effective
In mid-November, Moderna unveiled an interim analysis of its Phase 3 test, saying the vaccine proved 94.5% effective. The analysis was based on an examination of 95 cases of Covid-19 starting two weeks after participants received the second shot. Of those cases, just five came from the vaccine group.
A second analysis looked at 11 severe cases of Covid-19. All 11 came from the placebo group.
On Nov. 30, Moderna said its coronavirus vaccine was 94.1% effective in its final Phase 3 analysis. Of 196 cases of Covid-19, 185 occurred in the placebo group. Just 11 came from the placebo group. There were no severe cases of Covid-19 among those who received the vaccine.
Now, Moderna is seeking global authorizations for its vaccine.
The vaccine so far appears relatively safe. Severe side effects included injection site pain in 2.7% of participants following the first dose. Between 2% and 9.7% of participants reported fatigue, muscle pain, joint pain, headache, general pain and injection site pain/redness following the second dose.
On Dec. 15, FDA briefing documents said Moderna’s coronavirus vaccine had “met the pre-specific success criteria” in clinical testing.
MRNA Among 5 Coronavirus Vaccine Efforts In Phase 3
Moderna stock rocketed to a record high and broke out on Nov. 16. It hit new records on the last three trading days in November. Shares again beat those records on Dec. 1, though tapered off quickly.
Now, Pfizer and BioNTech have a slight edge in the race for a coronavirus vaccine. The duo now has authorization in the U.S., U.K. and Canada. People began receiving the Pfizer and BioNTech vaccine early this week.
And Moderna isn’t the only company using mRNA technology. BioNTech is also an mRNA pioneer. And Translate Bio (TBIO) also is taking mRNA approach to the Covid-19 vaccine it’s developing in partnership with Sanofi (SNY).
So, Is Moderna Stock A Buy Right Now?
Moderna stock is not a buy right now.
Shares are now decidedly above their 95.31 buy point. CAN SLIM investors are advised to buy a stock when it has cleared a buy point and is within the 5% chase zone. Moderna stock isn’t within that 5% chase zone. Rather, it was 57.5% above that entry in midday action on Dec. 15.
It’s also important to note that Moderna’s technology isn’t yet commercially proven. But the company has managed to put together two quarters of triple-digit sales growth. That’s expected to continue in the future. Further, beginning in early 2021, Moderna is expected to be solidly profitable.
Shares have a bullish RS Rating, but the company’s Composite Rating isn’t among the upper echelon of stocks.
It will be important to watch Moderna’s efforts to develop a coronavirus vaccine. That could help stoke both MRNA stock and the biotech company’s financials.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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