In the past month, Moderna (NASDAQ:MRNA), a winning stock for most of 2020 and 2021, has delivered anything but stellar returns. Down more than 25%, investors have taken profit with MRNA stock. Perhaps due to concern that recent news of a pill-based Covid-19 treatment from a major pharmaceutical company may limit future demand for the company’s flagship mRNA vaccine for the virus.
Also, there may be a bit of “sell the news” going on as well with regards to its booster shot catalyst. On top of all this, there is news of delays for the vaccine getting approved for use in adolescents. But whatever the reason behind its latest slide, I wouldn’t take it to mean it’s best to sell or avoid it.
Instead, taking into account both its recent weakness and long-term prospects may be a prime opportunity to buy. Enter a position now, after its pullback, could mean big returns ahead, as further developments reignite interest in the stock, helping to send it to (and possibly, above) the $500 per share price level, that it has so far failed to break through.
A rebound may not happen immediately. In the near-term, shares could stay stuck at around $300 per share. But coming in with an “A” rating in Portfolio Grader, with a rebound likely ahead, this stock remains a buy.
MRNA Stock and its Latest Slide in Price
Several factors have played a role in sending Moderna down to between $300 and $325 per share. Together, these factors have done a good job scaring many out of this stock. However, that doesn’t mean you should join the crowd. Instead, take a look at the details. They’ll tell you a different story.
What sort of different story? The doubtfulness seen in current investor sentiment about MRNA stock is in contrast to its actual prospects, which remain strong. The above-mentioned Covid treatment pill may appear to be something that’s going to reduce further demand for the vaccine.
However, that’s not going to be the case. Especially when talking about the U.S. market. Health experts and the Federal Government (through its employer-based vaccine mandate) are still pushing strongly for more widespread vaccination. In addition, with an FDA (Food and Drug Administration) panel recommending the use of a Moderna booster for high-risk groups, the company should see strong demand continue statewide. This on top of it getting the go-ahead from European health authorities for its booster.
What about the recent setback with getting its vaccine approved for adolescent use? In time, this may prove to be a short-lived hiccup too. Yet beyond just the potential still on the table for its Covid-19 vaccine, there are other candidates in its pipeline to keep in mind as positives for the years ahead.
Catalysts in Play Outside of Just its Covid-19 Vaccine
In his recent bullish rating on MRNA stock, Piper Sandler analyst Edward Tenthoff, pointed to continued success of the company’s Covid-19 vaccine as the main rationale for his “buy” rating, and $445 per share price target. Based on his projections, the company (thanks to the vaccine) should see about $19.5 billion in sales this year, and $33.5 billion in sales for 2022.
But along with highlighting while the “Covid catalyst” remains alive-and-well with Moderna, Tenthoff also touched on the promise with the non-Covid candidates in its pipeline. For instance, an mRNA-based flu vaccine that’s in development.
If it proves to be a more effective way to reduce illness/death each flu season, would the public become more comfortable in taking mRNA vaccine? It too could prove to be a major hit, once it makes it through the pipeline. Beyond being an in-development vaccine for the flu, Moderna has scores of other candidates in the works.
These include vaccines for various cancers, the Zika virus, along with vaccines/treatments for a slew of rare diseases. In time, these preclinical/Phase 1 candidates could emerge as catalysts for the stock.
The Verdict on Moderna Stock
Many in the market may have taken the view that the “ship’s sailed” with Moderna. But this sentiment doesn’t match up with the details. The development of a pill-based Covid-19 treatment from a rival won’t diminish demand for vaccination. Nor will it impact demand for its booster shot, which has received the go-ahead from U.S. and European health authorities.
With the prospect of it delivering strong results this year and the next, plus possible future catalysts like its mRNA flu vaccine, there’s a lot still pointing to renewed bullishness, and a move back to higher prices.
If you already own MRNA stock, it’s too early to sell. If you do not yet own it, It’s not too late to buy.
— Louis Navellier and the Investor Place Research Staff
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Source: Investor Place