Moderna (MRNA) remains a strong competitor in the race for a coronavirus vaccine. And, in mid-November, Moderna stock surged above a buy point after its experimental vaccine proved nearly 95% effective at an interim analysis of late-stage testing.
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But, it’s important to note the technology behind Moderna’s potential coronavirus vaccine hasn’t faced the Food and Drug Administration’s regulatory review. Moderna is attempting to create a vaccine that hijacks the body’s natural process for making proteins, using a technology called messenger RNA.
Shares of Moderna stock hit a record high on Nov. 16 after the company said its coronavirus vaccine was 94.5% effective in a Phase 3 test. This puts Moderna in line with competitors Pfizer (PFE) and BioNTech (BNTX) which have said their vaccine is more than 90% effective.
Moderna has several supply agreements for its coronavirus vaccine. In August, the U.S. government inked a deal for 100 million doses in exchange for up to $1.525 billion. That deal includes an option to purchase another 400 million doses.
A month later, the company announced Canada hiked its order commitment to 20 million doses. In October, Moderna partnered with Takeda Pharmaceutical (TAK) and the government of Japan to supply 50 million doses of its vaccine. It also unveiled a supply deal with Qatar.
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 but still commercially unproven 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 59-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 69-cent loss per share and $157.9 million in sales.
Moderna stock has a Composite Rating of 74 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 26% 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 more than 398% as of midday action on Nov. 16.
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 $1.92 a share, down from $1.56 in 2019. The Street calls for $420 million in revenue, skyrocketing 600% 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.
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.
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 98. The RS Rating is a 1-99 score of a stock’s 12-month performance. This puts Moderna in the top 2% of all stocks — regardless of industry group — in terms of performance.
But Moderna stock has a poor EPS Rating of 19, 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.
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.
MRNA Among 5 Coronavirus Vaccine Efforts In Phase 3
Moderna stock rocketed to a record high and broke out on Nov. 16.
Now, Moderna and Pfizer/BioNTech are leading the race for a coronavirus vaccine. The companies say they expect to ask the FDA for an emergency authorization later this month. Analysts say that could mean the coronavirus vaccines are available in early December.
Pfizer and BioNTech recently said their experimental coronavirus vaccine was more than 90% effective at an interim analysis of their Phase 3 test. Moderna stock also ramped up on the news.
Others in final-phase testing include Johnson & Johnson (JNJ), Novavax (NVAX) and AstraZeneca with its partner, the University of Oxford.
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 a buy right now — with some caveats.
Shares were flirting with their 95.31 buy point in midday action on Nov. 16. CAN SLIM investors are advised to buy a stock when it has cleared a buy point and is within the 5% chase zone. But they stayed well above an alternative buy point at 81.47.
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.
Moderna stock was also well above its 50-day and 200-day moving lines in midday action on Nov. 16.
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.
To find the best stocks to buy and watch, check out IBD Stock Lists. Make sure to also keep tabs on stocks to buy or sell.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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