Moderna’s stock has surged past a buy point after revealing promising interim trial results for its personalized cancer vaccine in melanoma patients.
Patients receiving the Moderna (MRNA) cancer vaccine next to Merck‘s (MRK) Keytruda were 44% less likely to relapse or die compared to those who received Keytruda alone. Both groups received their regimen for one year after surgical removal of the cancer. The vaccine helps patients generate T cells that are able to fight the cancer if it returns.
Merck has signed up for the cancer vaccination program. It paid Moderna $250 million upfront for the chance to develop and co-commercialize the cancer vaccine. The companies plan to begin phase 3 trials in melanoma next year and will explore other possible combinations with Keytruda.
Also recently, the Food and Drug Administration approved Moderna’s updated bivalent Covid injection for children under age 6. The injection targets BA.4 and BA.5 omicron strains, as well as the ancestral Covid-causing virus. In more than 500 adults, the injection led to “significantly higher” levels of antibodies that could handle these subvariants compared to the original vaccine.
But in the US those variants are no longer dominant. Newer sub-variants of omicron, known as BQ.1.1 and BQ.1, now account for about 69% of cases in the country. In an exploratory analysis, Moderna says the updated booster showed neutralizing antibodies versus BQ.1.1.
All of this comes on the heels of a ho-hum third-quarter report in which Moderna missed forecasts and lowered its full-year revenue outlook.
Importantly, Moderna is working to expand its non-Covid offering. In phase 3 testing, Moderna has a flu shot and vaccine that blocks respiratory syncytial virus in older adults. Moderna is also testing different combinations of flu, RSV and Covid vaccines.
Meanwhile, Moderna is suing Pfizer (PFE) and BioNTech (BNTX) claim their Covid injection infringes on their patented technology.
So, all in all, is Moderna a buy today?
A fundamental take on Moderna Stock
The third quarter was generally a disappointment for Moderna stock investors. The company posted earnings of $2.53 per share on sales of $3.36 billion. Profits fell 67% and sales fell 32%. Both measures fell short of expectations.
Moderna’s product sales fell 35% to $3.1 billion. This excludes a smaller contribution from collaboration income.
The results do not match CAN SLIM’s advice. Investors are advised to look for companies with recent earnings growth of at least 20%-25%.
Analysts currently expect sales to plummet in 2023 as Covid reaches the endemic stage. This quarter, analysts expect Moderna to earn $5 per share on $4.86 billion in sales. Profits would drop 56% and sales would drop 33%.
Moderna stock has a Composite Rating of 68 out of the best possible 99. The Composite Rating is a measure of a stock’s key fundamental and technical measures. So MRNA stocks are in the top 32% of all stocks on that metric.
What do annual statistics say?
Moderna shares went public in late 2018 at the age of 23. In 2020, shares are up more than 434%. Earnings were less optimistic in 2021 with shares rising 143%.
The base improved last year after the late 2020 launch of Moderna’s Covid vaccine. In 2021, Moderna earned $28.29 per share on $18.47 billion in sales. Profits turned around after a loss last year and sales skyrocketed.
The market for Covid boosters could remain intact as the virus continues to mutate. Today, newer offshoots of omicron called BQ.1.1 and BQ.1 have displaced BA.4 and BA.5 as dominant versions of the virus. The FDA has now approved the updated booster shot for children as young as 6 months old.
Moderna expects $18 billion to $19 billion in sales from its Covid vaccine this year.
Now MRNA stock analysts forecast $19.09 billion in sales in 2022 and $22.18 earnings per share. Sales would increase about 3%, but profits would decrease about 22%.
Moderna Stock: Technical Analysis
According to MarketSmith.com, Moderna stock broke from a cup-with-handle base on Dec. 13 with an entry of 188.75. Investors are encouraged to buy a stock when it crosses a buy point. The stocks are now above their major moving averages.
MRNA stocks have a Relative Strength Rating of 95. The RS Rating is a 1-99 measure of a stock’s performance over 12 months. This means that Moderna stock is in the top 5% of all stocks on that measure.
But MRNA stock has a poor EPS rating of 15, reflecting a recent drop in earnings.
Keep an eye on IBD Digital for more information on stock ratings.
Covid vaccine faces competition
This month, the FDA signed off on Moderna and Pfizer’s Covid vaccines for babies as young as 6 months old.
In the case of Moderna, the authorization is based on a booster after the original two-dose series. Pfizer’s first series in this age group requires three shots. However, the authorizations are based on preclinical data. The vaccines are still being tested on humans and results are expected in early 2023.
Last month, the first data from adult vaccine trials showed that the updated booster is superior to the original vaccine when it comes to generating BA.4 and BA.5 blocking antibodies. Side effects were similar to the original vaccine.
However, the rivalry with Pfizer is on the rise. Moderna shares plummeted on Dec. 12 after Pfizer issued bullish outlooks for its rival mRNA-based vaccine business. The company called for sales of $10 billion to $15 billion by 2030. In response, Moderna’s shares fell nearly 7%.
So, is Moderna Stock a buy now?
No, Moderna shares are not bargains. The shares are now above their buy zone, which ranges from 188.75 to 198.18. MRNA stock could be a buy again if it returns to its buy zone. It will be critical to see whether Moderna shares can hold onto their bullish gains.
The company has managed to post strong sales growth. Analysts expect this to continue this year. Further, they see the company as solidly profitable for the foreseeable future. But analysts are calling for a drop in both metrics in 2023.
Stocks have improved relative strength and composite ratings.
It will be important to review Moderna’s post-Covid efforts. That could boost both the mRNA supply and the biotech company’s financial position.
Check out the IBD Stock Lists to find the best stocks to buy and view. Be sure to also keep an eye on the stocks to buy or sell.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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