Will Second Quarter Earnings Inject Core Momentum into Moderna’s Share Price

Biotech stocks have seen massive rallies since the search for a coronavirus vaccine took off, and Moderna’s [MRNA] share price has been no exception.

As the firm edges closer to a potential vaccine for COVID-19, Moderna’s share price has reached new heights. On June 17, its best-ever day of trading, the stock reached an intraday high of $95.21 before closing at $94.85, an increase of 384.9% for the year to date.

Moderna’s share price rally has since cooled off somewhat, closing at $74.10 on 31 July. However, the stock did briefly spike on 27 July — jumping 9.15% to close at $79.91 —following the news that the company would receive $472m from the federal government to support the development of a vaccine.

Considering the stock debuted on the market in December 2018 for $23, early investors will be delighted that Moderna’s share price is up 218.3% for the year to date.

Investors will be watching closely to see if its upcoming earnings report can boost Moderna’s share price even further.

When is Moderna reporting Q2 earnings?

5 August

How didModerna perform in Q1?

Moderna’s share price enjoyed a brief rally following the announcement of its first-quarter earnings on 7 May 2020.

The biopharmaceutical firm reported a loss of $0.35 per share, compared to a loss of $0.40 a year previous, narrowly beating the Zacks consensus estimate of $0.37 per share and representing an earnings surprise of 5.4%.

Total revenues came in at $8.39m, missing the research publication’s consensus estimate by 53.8%. The figure was also significantly lower than Moderna’s reported $16.03m revenue from the same period a year before. While the firm has surpassed consensus earnings estimates for the past four quarters, it has only beaten revenue estimates once, and this may well affect Moderna’s share price following Q2 results.

Looking ahead to its second-quarter report, the consensus among analysts according to Tip Ranks is for Moderna to announce a loss of $0.36 per share, compared to a loss of $0.41 per share for the same period last year.

Moderna’s share price may well benefit from the news it will be enjoying a US government award. The Department of Health’s Biomedical Advanced Research and Development Authority has committed to providing Moderna with $472m to support late-stage clinical development of a COVID-19 vaccine candidate, including expanded phase three trials. Moderna will begin its next stage of drug trials on 30 000 volunteers across the US.

The latest round of government funding, in addition to the previous cash injection of $483m, takes the company to nearly $1bn in funding. This clearly shows that the US government has some faith in the firm, despite the fact it has never successfully launched a medicine before.

What the analysts think

Mani Foroohar, an analyst for SVB Leerink, set a $65 price target. Although this represents a 16.65% downside on Moderna’s share price through 3 August’s close, Foroohar said he believes the news of the company's most recent funding injection will help "drive near-term recovery", according to MarketWatch.

“Consensus expectations in the medium- and long-term bake in aggressive price and share assumptions, despite numerous competitors entering the market,” Foroohar wrote in a note. “We view the current valuation and expectations as offering unattractive risk/reward to investors.”

Moderna has a consensus Buy rating from Zacks Equity Research, in line with the consensus among 15 analysts polled by CNN Money — a rating held by 12 analysts, with the remaining three suggesting to hold the stock.

Contrary to the wider consensus, JPMorgan analyst Cory Kasimov downgraded his rating to Neutral from Overweight, and set a price target of $89. He said that while he expects longer-term gains from Moderna’s stock, “we’re simply unable to continue to fundamentally justify it”.

The median 12-month price target among 14 analysts polled by CNN is $92, with a high estimate of $134 and low of $65. The median price represents a 17.98% increase compared to Moderna’s share price as of 3 August’s close.