Moderna - Dead cat bounce? Or the opportunity of the decade?
If we had published this article in October, this vaccine manufacturer would not have received much praise. In fact, at that time, Moderna's shares had fallen by almost half since the start of the year. Since then, however, Moderna shares have rallied incredibly, gaining over 60% in less than two months. Is this growth justified? Or should we call it the dead cat bounce - the term we use to describe the last rise in stock before the subsequent crash?
However, this term might be way too harsh. The truth is that Moderna shares were thriving during the coronavirus and, thanks to it, the company is now well-funded. However, as interest in the coronavirus gradually declined, so did investor interest in Moderna's shares. They became more of a haven for speculators. But let's take a closer look at the gradual fall and subsequent rise of Moderna shares.
According to some fundamentals, Moderna currently looks highly undervalued. For example, the P/E ratio (the ratio of share price to earnings per share) is around 7, which is extremely low. However, such a low value already signals that something may not be right with the company. Moderna has profited highly from sales of vaccines and booster shots and still registers high demand for its products.
However, the world is slowly forgetting the coronavirus or at least learning to live with it. Even high profits and order numbers have not impressed investors in this year's bear market. They see Moderna as doomed without new products because of its dependence on covid vaccines. Last year, it recorded a massive profit of over $12 billion, but since then, every quarterly profit has fallen, which investors do not like to see. However, it would be unfair to prematurely write off Moderna stock. Let's take a look at the reasons for the growth of the past two months, as well as the future outlook.
Shares Moderna development on D1 timeframe in MT4 platform
What will 2023 bring for Moderna shares?
To consider Moderna as a one-trick pony would be a mistake. So while a positive step in shaping Moderna's share price was certainly the approval of a covid booster for children by the US FDA, for the main price booster we have to look elsewhere.
Skin cancer is one of the common types of cancer and when untreated, it can have fatal consequences. And it is against this type of disease that Moderna, together with Merck, has developed an extremely successful vaccine. In fact, tests to date show that patients who have used the vaccine have up to 44% less chance of dying or relapsing. Unfortunately, since melanoma, unlike covid, cannot be classified as an episodic disease, these vaccines could be a source of revenue for Moderna for years and perhaps decades to come.
The vaccine is expected to move into Phase 3 testing next year. Thus, coronavirus vaccine revenues will continue to fall over time, but Moderna may have another ace up its sleeve very soon. Speculators should keep a close eye on any news of a new melanoma vaccine, Moderna's stock is likely to rise and fall on account of it.