The world has recently been allowed to breathe a bit easier thanks to Moderna (NASDAQ:MRNA). Now and after a breathtaking tumble, is it also time for investors to capitalize on MRNA stock? Let’s see what’s happening off and on the price chart, then offer a risk-adjusted determination aligned with those findings.
It’s been a week since Moderna’s mRNA-1273 became the second vaccine in the U.S. to be given the green light. And it couldn’t have gotten here quick enough. The U.S. has only just cleared the million-vaccination mark. It remains woefully short of forecasts calling for 20 million by the end of December. All the while, the U.S. death toll continues to skyrocket with more than 330,000 casualties from Covid-19.
But it will get better. And MRNA is a definite part of that outcome.
Moderna’s vaccine is more than just another line of defense against the coronavirus. mRNA-1273 offers the ability to immunize populations where Pfizer’s tricky and costly cold storage logistics aren’t feasible. And for what it’s worth, Dr. Joseph Varon, one of the first frontline workers to receive the Moderna vaccine, stated “this is like having gold.”
MRNA stock investors apparently don’t like the look of gold.
Shares are off since the first mRNA-1273 inoculation. And since Moderna’s Dec. 1 all-time high reached when it was seeking the drug’s emergency use authorization, shares have slid 36%.
Monday’s session added nearly 10% to the decline, or more than one-third of the total correction. Reports of an allergic reaction, competitive threats from Novavax (NASDAQ:NVAX) tied to phase-3 clinical trial news and buzz AstraZeneca (NYSE:AZN) will receive U.K. approval for its vaccine, may have each played a socially distanced hand in MRNA stock’s continued selling pressure.
Will three, four or more competitors prove too crowded of a field within the Covid-19 market for MRNA? It doesn’t appear so. mRNA-1272 is the company’s first marketed product. And with it are revenues on a blockbuster scale. Importantly, Moderna has secured global orders worth more than $7 billion to potentially more than $13 billion next year. And those numbers, even in the face of competition, can only grow larger.
With a market capitalization of around $45 billion, MRNA’s price versus sales is higher than established competitors Pfizer and still-experimental Covid play Johnson & Johnson (NYSE:JNJ). Moderna’s valuation is also considerably smaller.
The company also has two compelling phase-2 candidates with massive sales potential. And now Moderna is in position to greatly expand its pipeline with other mRNA therapies and vaccines using cash generated from mRNA-1272.
MRNA Stock Weekly Price Chart
Source: Charts by TradingView
I discussed MRNA just a couple weeks ago. The write-up warned of the stock’s downside risk and potential for a corrective move into Fibonacci-based price support from $95-$115. Shares have now entered this area. But locating a bottom remains unfinished business.
Currently, a recent bearish stochastics crossover is pointing firmly down inside neutral territory. It’s a problem for today’s MRNA buyers. Until a flattening or more ideal bullish crossover emerges alongside a candlestick reversal pattern, the odds of zone support working successfully are much more questionable. As such, investors should monitor shares from the sidelines. The thing is, today’s fairly common correction could turn a great deal uglier. And right now, we don’t have sufficient evidence it won’t.
Bottom line, Moderna’s correction could turn into a terrific proposition to buy an up-and-comer on calculated price weakness. But today’s technical circumstances mean there’s no need to rush MRNA stock as an investment. If conditions do change to favor tomorrow’s buyers, hedging that opportunity with a limited-risk and highly adaptable collar strategy looks like an even smarter approach in a volatile stock of Moderna’s caliber.
Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article.
The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
