Is this that dip? Long-time readers well know that I went long most of the pharmaceuticals and biotechs that were working on either vaccines or therapeutics in the fight against COVID-19 since before this pandemic went global. Since before my own torturous experience with this evil virus. My biggest hit was Moderna (MRNA) . My biggest swing and miss was BioNTech (BNTX) . My Regeneron (REGN) position was a good example of how not to trade. The one I have never sold is Pfizer (PFE) . Now, about Moderna. Oh, that was one of my finest trades. Fact is that though I looked right on the out trade at the time, I ended up leaving a chunk on the table, and have waited for that all-elusive dip to re-enter.
Moderna, just in case you live under a rock, is the developer and manufacturer of one of two messenger RNA vaccines that to this point have proven to be the safest and most effective of all vaccines of any type developed globally. The other is the joint Pfizer/BioNTech offering. Oh, you have seen Novavax (NVAX) this (Friday) morning, right?
On Thursday morning, Moderna released the firm's second quarter financial results. The firm posted EPS of $6.46, easily crushing estimates. Revenue landed at $4.35 billion, also a beat, and good enough for year over year growth of 6,392%. Not a misprint. Sales of 199 million doses of the mRNA-1273 vaccine alone accounted for $4.2 billion of that $4.35 billion in quarterly revenue. The $6.46 EPS number breaks down to $2.8 billion in net income, up from $-117 million for the year ago period.
Net cash provided by operating activities hit $7 billion for the first half, comparable to $130 million for H1 2020. The firm has already signed advance purchase agreements for sales of roughly $12 billion worth of product with options in place for another $8 billion or so. Moderna has already started taking orders for 2023. Moderna expects dose capacity for this vaccine for FY 2021 to land between 800 million and 1 billion, and for 2022 between 2 billion and 3 billion.
CEO Stephane Bancel 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 provides protection against COVID-19, Flu, and RSV for adults." Wouldn't that be nice?
The firm said on Thursday that it expects people who have received its two dose COVID vaccine to need a third shot this autumn to keep strong protection against the newer variants of the virus. Moderna will apply to the FDA to authorize third jabs in September. Pfizer also plans to ask regulators to authorize third shots as recent studies show that their jab loses a rough 6% of efficacy per month and many of our most vulnerable citizens were jabbed as far back as late 2020.
The Biden administration is trying to push ahead with a rapid release of some kind of booster strategy as it becomes apparent that these vulnerable pockets of our population probably can not wait. On that note, the FDA does expect to have a strategy in place for getting this done by September that lays out priorities and eligibility for such a program.
I have seen three analysts rated at five stars by TipRanks opine on Moderna since the earnings release. There really is not much consensus. Oppenheimer's Hartaj Singh downgraded the stock to "perform" from "outperform" with no price target stating "MRNA shares are fairly pricing a fair amount of future recurring revenues and pipeline progress."
Gena Wang at Barclays maintained her "overweight" rating, while increasing her target price to $463 from $194. Not a misprint. Lastly, Edward Tenthoff of Piper Sandler downgraded the stock from "overweight" to "neutral", while increasing his price target from $246 to $445. Tenthoff made note of the stock's elevated valuation.
The shares are only trading at 17 times forward earnings, and in my opinion might not be fully valued just yet. We must remember that when analysts move a target price up hundreds of dollars while downgrading a stock, that despite their ratings, they surely just do not know.
Even with the shares trading a rough $44 below the Thursday highs, they remain technically overbought. I mean, the RSI, daily MACD, and Full Stochastics Oscillator are all flashing yellow lights this morning. As a trader, I am interested to see how close the shares can get to the 21 day EMA at $334. As an investor, I see that gap down around the $261 to $271 area and salivate. Probably not going to happen. Not soon anyway.
As for the equity, today is not the day. However, for investors or at least this investor... The September 17th $270 puts (worth about $1.75), and the October 15th $270 puts (worth about $4.60) are calling my name. Am I cool exposing myself to equity risk over time at the $270 level for a stock trading at $400? I think so. I could use the pocket money ($6.35 or $635 if I write one of each contract). This will be an options play for me. For now.