Moderna stock crash: Is it worth buying after disappointing earnings?ย ย
Pharmaceutical giant Moderna saw its stock plunge 30% after a disappointing earnings report. Is it worth buying the dip?ย ย
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Pharmaceutical giant Moderna (MRNA) was one of the clear winners of the 2020-21 pandemic-driven economy. Its vaccine raked in billions through government contracts as its stock price soared.ย ย ย
Allย its success garnered over the past year came to a sudden halt following its latest disastrous earnings report.ย ย
Today we look at Modernaโs performance over the past year, whether its price will rally or not, and share valuable advice for traders.ย ย
Stock crashย ย
Shares of Moderna traded 17% lower on November 5 after the company’s third-quarter earnings failed to meet market expectations. Not only did the company miss revenue expectations it also lowered its full-year sales outlook.ย ย ย ย
Moderna lowered its forecast for 2021 vaccine sales to $15 billion – $18 billion, down from an earlier forecast of $20 billion. Moderna reported revenue of $4.97 billion, below the market expectation of $6.21 billion. Its net income was $7.70 per share, versus the analyst estimate of $9.05.ย ย
Despite missing its earning’s target, Moderna’s financial situationย remainsย impressive; Modernaโsย $4.8 billionย in product sales in Q3 2021 is an improvement of $613M (+15%). It should be noted that in the period 2019-20, Moderna reported no profits from product sales.ย ย ย
Due to an increase in COVID-19 vaccine production and increased shipments in 2021, Moderna’s profitability improved significantly. The company now generates more than $3 billion in quarterly profits and net margins are surging.ย ย
All of this did nothing to persuade traders to stick with the company as its stock price crashed from a high of $350 on Nov 3 to $215 on November 5. By November 8 it was still down 16% though recovered to $236.ย ย
Modern stock price:ย November 1 โ 5ย
Moderna is also reeling from global production and shipment issues; the company expects to ship between 700 million – 800 million vaccine doses, down from a predicted 800 million – 1 billion doses.ย ย
Pfizer pill could cause havocย ย
Rival drugmaker Pfizer (PFE) announced itsย investigationalย antiviral treatment (i.e.,ย a pill) could reduce the risk of hospitalization or death by 89% in non-hospitalized adults with COVID-19.ย ย ย
Pfizer said it intends toย submitย its game-changing data to the US Food and Drug Administration and request Emergency Use Authorization for mass rollout of its drug.ย ย
The Pfizer pill is certainly good news for vaccine-adverse consumers but could spell unwelcome news for rival companies ifย it’sย proven to be as safe and effective as the current vaccines on the market.ย ย ย
In this scenario, Moderna’s vaccine sales could dramatically crash by 2022.ย ย
Modernaโs future revenues look promisingย ย ย
One important thing to note is Moderna has built up an enormous amount of cash to the tune of $15.3 billion. This means the company has the capital needed to advance its current vaccine programs and push future treatments down the pipeline.ย ย
Moderna is contracted to deliverย $12 billionย worth of vaccines in 2022 with options to sellย $8 billionย more doses. The company is also reportedly signing agreements for 2023 as countries prepare for an endemic phase of the virus.ย ย ย
Modern stock price: 6 months (+49.47%)ย
Modern stock price: YTD (+112.11%)ย
Whatโsย next for the company?ย ย ย
The company said it would explore a combination vaccine that aims to offer protection against the common flu and COVID-19.ย ย ย
Earlier in 2021, Stรฉphane Bancel, Chief Executive Officer of Moderna, said: “We have begun preparing late-stage studies for our flu vaccine and RSV vaccine, which received fast track designation from the FDA a few days ago and are looking forward towards our vision of a single dose annual booster that protects against COVID-19, flu, and RSV for adults.”ย ย ย
This could be a huge windfall for Moderna if it can secure long-term contracts with global governments.ย ย
Beyond COVID19ย ย
ย Moderna has more than 30 medical programs in the pipeline across many treatment areas. Earlier in 2021, it launched a pivotal trial for a cytomegalovirus vaccine candidate. The treatment could bring in at leastย $2 billion.ย ย
Buying the dipย ย
Is nowย a good timeย to buy Moderna shares?ย It’sย not the first time Moderna shares hit an obstacle; itsย meteoricย rise in 2021 was first curbed in September when analysts revealed the stock was overvalued, plunging its price by 35%. It swiftly recovered.ย ย ย ย
Many analysts are looking at a post-pandemic world and here is where long-term investors could shine. The coronavirus vaccine allowed Moderna to make billions of dollars but unless the company looks towards a post-COVID19 future, itย won’tย survive. The COVID-19 vaccine may be just the beginning for this biotech company, and it has bright prospects for the future.ย ย
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Prices are accurate at the time of publishing.ย ย