by Moderna (MRNA) redoubles its cancer treatment efforts with Merck (MRK). But Moderna’s stock peaked in mid-2021 and has been falling ever since.
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The companies are testing their cancer vaccine in combination with Merck’s Keytruda in patients with melanoma. In a recent update, the combination reduced the chance of patients’ cancers spreading or leading to death by 65% compared to Keytruda alone.
Moderna and Merck are studying the vaccine in relatively healthy patients, which increases the chance of success. The patients had their melanoma surgically removed and had not received previous treatment. The companies plan to start a late-stage trial this year and quickly expand to other cancers.
Moderna recently revealed the first results of its research into propionic acidemia, a rare disease in which the body cannot break down certain proteins and fats. There are no dose-limiting side effects and the treatment appears to be tolerable. That is important, because Moderna is testing the drug in children.
Moderna also said it has begun submitting information to the Food and Drug Administration in hopes of gaining approval for its vaccine to prevent respiratory syncytial virus, or RSV, in older adults. In general, RSV causes cold symptoms. But it can be serious or fatal in older adults and newborns. If approved, Moderna could launch its vaccine around the same time Pfizer (PFE) and GSK (GSK). The latter two have already received US approval.
But Moderna’s sales and profits fell in 2022, and analysts expect that to happen again this year as demand for Covid vaccines declines. The FDA recently said drugmakers should update their Covid vaccines to address the dominant XBB.1.5 subvariant. However, that species is no longer dominant in the US
So, all in all, is Moderna’s stock a buy or a sell today?
A fundamental take on Moderna Stock
Moderna’s first-quarter numbers beat expectations, though they tumbled on a year-over-year basis. Earnings came in at 19 cents per share, versus forecasts for a loss of $1.75 per share. Profits fell by 98%. Revenue also fell 69% to $1.86 billion, but surpassed calls for $1.18 billion.
Analysts still expect sharp declines for Moderna as Covid vaccinations and boosters ease.
For the second quarter, they expect a loss per share of $4 and more than $308 million in sales. Earnings would flip from last year’s earnings of $5.24 per share and sales would drop nearly 94%.
Moderna only expects $200 million to $300 million in sales for the current period.
Moderna stock has an IBD Composite Rating of 18 out of the best possible 99. The Composite Rating is a measure of a stock’s key fundamental and technical measures. So, MRNA stocks are among the lowest one-fifth of all stocks on that measure.
What do annual statistics say?
Moderna shares went public in late 2018 at the age of 23. In 2020, shares are up more than 434%. Earnings were less optimistic in 2021, with shares rising 143%. In 2022, shares are down 29%.
Revenue posted a small 4% gain last year to $19.26 billion. That’s just better than projections for $19.13 billion, according to FactSet. Moderna had forecast revenue of $18 billion to $19 billion. But earnings fell 29% to $20.12 per share.
The market for Covid boosters is uncertain. The updated bivalent booster shots from Pfizer and Moderna block the BA.4 and BA.5 strains of omicron as well as the original virus. But those tensions are not responsible for cases in the US today. A variant called XBB.1.16 is now dominant in the US. From June 25 to July 7, it accounted for 17.5% of Covid cases sequenced.
The FDA recently asked drug makers to update their Covid boosters for a variant called XBB.1.5. At the time, it was the leading cause of consecutive Covid cases. Today it accounts for a lower 16.1% of cases.
The demand for boosters has also decreased. Only 17% of people six months and older had received one of the updated bivalent boosters from Moderna or Pfizer, as of the CDC’s last update on May 11.
MRNA stock analysts expect revenue to crash 63% to about $7.18 billion in 2023. That includes projections for $6.63 billion from the Covid vaccine. But Moderna forecasts only $5 billion in sales from the Covid shot, based on agreements already signed.
Moderna Stock: Technical Analysis
Moderna stock is not currently forming a chart pattern, according to MarketSmith.com. Stocks are trading below their 200-day moving average, but are now in line with their 50-day moving average.
MRNA stocks have an IBD Relative Strength Rating of 12. The RS Rating is a 1-99 measure of a stock’s performance over 12 months. This means that Moderna stock is below the bottom fifth of all stocks on that metric.
But MRNA stocks have a poor EPS score of 7, reflecting recent losses.
Keep an eye on IBD Digital for more information on stock ratings.
What comes after Covid shots?
Investors are paying close attention to the tailor-made cancer vaccine in collaboration with Merck. The injection elicits an immune response against a patient’s own tumor cells.
The cancer vaccine reduced the chance of cancer spreading or leading to death in melanoma patients by 65% compared to Keytruda alone. Keytruda is the standard treatment for melanoma after surgery. Now the companies plan to begin a final phase study later this year.
Moderna and Merck also plan to test their cancer vaccine against other cancers, including a common form of lung cancer.
In addition to cancer, Moderna also has a breakthrough title for its RSV injection. In older adults, the injection was found to be nearly 84% effective against mild disease and more than 82% effective against severe RSV.
The FDA has already approved RSV vaccines from GSK and Pfizer. Moderna recently started the process of asking the FDA to approve its RSV injection. That puts the trio on deck to compete for the RSV vaccine market in the US this fall.
Moderna also revealed the results of a possible treatment for propionic acidemia, a rare genetic condition in which the body cannot break down certain proteins and fats. After one year of treatment, most patients had no or less disease-related metabolic decompensation. Metabolic decompensation is a set of symptoms that includes vomiting and food refusal.
So, is Moderna Stock now a buy or a sell?
No, Moderna shares are not a buy at this time. Moderna shares are trading below the 200-day line. Furthermore, shares do not provide a clear entrance for investors. In at least one measure, Moderna’s stock was a sell-off when it dipped below the 50-day line on April 17. That is a bearish sign. Now it’s trying to recapture that moving average.
The company’s once-conspicuous sales and profits are expected to decline this year and next. Analysts don’t expect a return to massive growth in the pandemic era until 2027. That year, they expect strong sales of Moderna’s personalized cancer vaccine and vaccines that block HIV and the seasonal flu.
Check out the IBD Stock Lists to find the best stocks to buy and view. Be sure to also keep an eye on the stocks to buy or sell.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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