A lack of news about Moderna’s (NASDAQ:MRNA) vaccine for the coronavirus from China, along with reduced fear about the virus, will likely push the company’s stock down for the next couple of months. As a result, I recommend that investors wait until MRNA stock falls to $25 before buying its shares. Existing owners of the stock should take profits now and buy the shares again when they fall to $25.
In my column published on Feb. 6, I recommended that investors buy MRNA stock. My recommendation was partly based on the company’s partnership with the National Institute of Health on the development of a coronavirus vaccine that a top government official had called “promising.” Since my column was published, the stock has jumped as much as 50%, peaking on Mar. 18 when it was announced that the first patient in a clinical trial of the vaccine had been dosed with it.
On Mar. 16, Evercore analyst Umer Ruffat, after speaking with Moderna’s management, reported that initial data on the vaccine could be announced “as early as June,” In other words, there probably won’t be any positive news about Moderna’s vaccine before June.
Fears Will Ease and the Spotlight Will Shift
There’s a high likelihood that fear about the coronavirus will fade in the coming days and weeks, while the spotlight will be focused on drugs that are going to be used to treat the virus.
Since I began, a few weeks ago, to report that it looks as though coronavirus might spread much less in warm areas, more evidence has arisen to support that idea. Most recently, AccuWeather reported on a Chinese study, written by Jingyuan Wang, Kai Feng, and Weifeng Lv of Beihang University, and Ke Tang from Tsinghua University. The researchers, who controlled for differences in nations’ wealth, found that “in the early dates of the outbreaks, countries with relatively lower air temperature and lower humidity (e.g. Korea, Japan and Iran) saw severe outbreaks {more} than warmer and more humid countries (e.g. Singapore, Malaysia and Thailand) did.”
Thus, as we move into April and more of the northern hemisphere warms up, the spread of the coronavirus should ease.
Meanwhile, there is evidence that an existing drug — chloroquine, an anti-malaria treatment, — will be able to effectively treat coronavirus. A trial of 24 coronavirus patients in France, conducted by Professor Didier Raoult from the hospital l’Institut Hospitalo-Universitaire (IHU) Méditerranée Infection, showed that patients who had taken chloroquine “had seen a rapid and effective speeding up of their healing process, and a sharp decrease in the amount of time they remained contagious.”
Despite the successful results of the trial conducted by an “infectious diseases specialist,” the man described as the government’s “top infectious disease expert,”Dr. Anthony Fauci, inexplicably said recently that only “anecdotal” information supported choloquine’s efficacy. Further, MSNBC reporter Peter Alexander suggested that President Donald Trump was “giving Americans a false sense of hope” because the president had expressed optimism about chloroquine. Nevertheless, New York Governor Andrew Cuomo, after speaking with health officials, said “there is a good basis to believe that {choloroquine and other drugs} could work.” Taken together, the French trial and Cuomo’s statement suggest that there’s a very high chance that choloroquine and other drugs, including Gilead’s (NASDAQ:GILD) remdesivir, will make a big difference in the battle against coronavirus.
Moderna’s Long-Term Outlook and the Bottom Line on Its Stock
I remain upbeat on the company’s technology and longer-term outlook. Its technology and pipeline sound very promising, and there’s a good chance that its vaccine for the coronavirus will indeed work.
However, as warmer weather arrives and drugs start to slow the spread of coronavirus and its fatality rate, fears about the virus are likely to ebb in the coming days and weeks. Further, there will be little, if any, news about Moderna’s vaccine until June. In that environment, I expect MRNA stock to drop to the $24-$25 range, giving medium-term and long-term investors the opportunity to buy the shares at a lower level than today’s price.
As of this writing, Larry Ramer owned shares of Gilead stock. Larry Ramer has conducted research and written articles on U.S. stocks for 13 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been GE, solar stocks, and Snap. You can reach him on StockTwits at @larryramer.
