Moderna (NASDAQ:MRNA) is emerging as the frontrunner in the race for a Covid-19 vaccine. And markets are rewarding MRNA stock accordingly. But despite its frontrunner status, the stock is still way off its 52-week high of $95.21 per share.
After a sharp correction in the last two months, the stock is surging once again. That’s because of several bits of positive news that the markets are now absorbing.
Early-stage data revealed its vaccine can produce neutralizing antibodies in older and elderly adults at levels comparable to those in younger adults. That was a key win for the company as people with preexisting conditions and the elderly are the most at risk.
In an interview, Dr. Anthony Fauci has already indicated that first responders and at-risk patients will be the first recipients of the vaccine. That makes sense, and also means that the company will have high sales through till at least 2022.
With all this going for it, and technical signals indicating that you should add it to your portfolio, MRNA stock is looking like a great investment.
Technical Indicators Bullish for MRNA Stock
Moderna had its IPO in December 2018. And since that time, it has ebbed and flowed. It went as high as $30 a pop and as low as $11.54, just to give you an idea regarding the oscillation.
But the bulls were firmly in control when the company started work on a Covid-19 vaccine back in February, sending the stock skyrocketing. Shares broke out of the mid-$30s range in July, hitting an all-time high at $95.21.
Since early August, price action forms a reverse head-and-shoulders pattern, threatening to break out into a higher trajectory. The neckline of $73 per share is giving strong resistance to these ambitions. But a breakout towards the upper $80s is a real possibility with the company waiting on an FDA approval.
After a two-month market correction, MRNA stock is ready to rally once again.
With Moderna emerging as one of the clear winners in the Covid-19 vaccine race, it’s slated to have a massive year in 2021. The company is looking to deliver approximately 500 million to 1 billion doses next year. For the U.S., roughly 100 million doses are earmarked as part of a $1.5 billion deal. The deal includes the provision of an additional 400 million doses.
That may seem cheap considering this is a Covid-19 vaccine we are talking about, but the company has already received close to $1 billion from the U.S. government.
However, there are two areas that I would like to mention that could be a sore spot Moderna. Its line of vaccines needs to be stored in sub-zero temperatures, which may or may not be available in several developing nations.
The U.S. will probably have the cold storage facilities in place for dissemination. But vaccines from both AstraZeneca (NYSE:AZN) and Johnson & Johnson (NYSE:JNJ) remain stable under normal fridge temperatures. This gives them a distinct advantage over Moderna medications.
The second big thing is the pricing. If you consider the approximately $2.5 billion in financing Moderna is getting, you end up with a per-dose price of somewhere around $25. Meanwhile, Pfizer (NYSE:PFE) and BioNTech (NASDAQ:BNTX) are looking at a per-dose price of $19.50.
The company has signed a $1.95 billion agreement with the U.S. government for 100 million doses of BNT162. AstraZeneca and Oxford University’s AZD1222 is even cheaper. The medication is likely to cost somewhere around $2.96 to $4 per dose. Johnson & Johnson is looking to price its candidate at $10 per dose.
Hence, although Moderna has the first-mover advantage, it is likely to be the costliest vaccine around. That will eat away at its market share in the long term.
Everything Looks on the Up and Up
MRNA is an ideal stock to add to your portfolio. After a two-month market correction, shares are ready to rally once again, and there are plenty of positive beats that should drive sales for the next few years. Regardless of the recent fall from peak valuation in mid-July, the company is solidly placed to ride out the rest of the year on a high.
Any issues about the vaccine’s long-term sales potential will not hinder its initial sales. And that’s what will ultimately drive its growth story in the near term. Plus, with 23 candidates across 22 programs and six modalities, Moderna is not a one-trick pony.
On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. He has several years of experience analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.