Moderna shares surge following strong earnings

Until last year, Moderna [MRNA] was relatively unknown but, since the beginning of the pandemic, the company’s share price has followed an upward trend, which recently reached unprecedented heights.

Over the course of 2021, Moderna’s share price performance has followed a series of peaks and valleys. It got off to a good start at the beginning of the year then, on 8 February, the stock closed at $185.98, up 78.03% year-to-date.

However, the firm’s share price stagnated until 2 June, when it closed at $191.60. It hasn’t fallen below this. Moderna’s share price grew exponentially in the weeks that followed, as it went on to set a new all-time high record when it reached $493.76 during intraday trading on 9 August – marking an incredible growth of 373% year to date.

The record value didn’t last. Moderna’s share price fell 20.46% from its 9 August close of $484.47 to close at $385.33 on 11 August.

There have been several factors driving Moderna’s share price, which includes Australia recently authorising the use of its vaccine for the first time and a report that Moderna’s vaccine is considerably more effective against the Delta variant of the coronavirus compared to competitors such as Pfizer. Perhaps one of the biggest factors on Moderna’s share price, however, is that of its recent earnings report.

How has Moderna been performing?

In its second-quarter earnings report, published 5 August, Moderna reported earnings of $6.46 per share, which beat the Zacks Consensus Estimate of $6.01 by 7.48%, marking a considerable difference from the $0.31 loss that the firm reported in last year’s second-quarter earnings.

Quarterly revenues, on the other hand, reached $4.4bn, which also beat the Zacks Consensus Estimate of $4.29bn by 2.56% and marked a 6,302.99% increase from 2020’s second-quarter revenues of $67m. The impressive earnings were attributed to sales of the Moderna vaccine.

“I am proud of the progress our teams at Moderna have made in the past quarter in advancing our development pipeline while addressing a global pandemic and quickly establishing global manufacturing and commercial organisations,” said Stéphane Bancel, Chief Executive Officer of Moderna in a press release published alongside the second-quarter earnings.

Looking ahead to the rest of the year, Zacks analysts anticipate Moderna’s earnings of $9.46 for the current quarter and $29.04 for the rest of the year, representing year-over-year growths of 1,703.39% and 1,581.63% respectively. Meanwhile, revenues are expected to reach $6.48bn for the current quarter and $19.89bn for the year, marking respective increases of 4,005.79% and 2,375.51%.

What the analysts think

Moderna’s share price has a consensus Buy rating from Zacks Equity Research, which is bullish when compared to the consensus of 18 analysts polled by CNN that suggest holding the stock. This is made up of five ‘buy’ ratings, one Outperform, one Underperform, three Sell and eight Hold ratings.

The median 12-month price target among 12 analysts polled by CNN is $271.50, with a high estimate of $463 and a low of $85. The median price represents a 30.4% drop from Moderna’s closing share price as of 13 August.

For investors with an interest in the wider biotech theme, Moderna’s performance could affect thematic ETFs such as the iShares Nasdaq Biotechnology ETF [IBB], for which Moderna is the fund’s largest holding, with a 9.78% weighting.

In line with Moderna’s share price surge, the IBB spiked on 9 August and reached an all-time high of $176.81 before closing at $176.21 – up 16.32% year-to-date. While Moderna’s success has helped the IBB grow in the past month, it’s worth noting that the ETF has shown considerable volatility throughout 2021 having fallen into the red several times over the year, the worst of which was when it closed at $146.13 on 13 May, down 3.54%.

Of course, if Moderna bounces back from the recent sell-off and continues to grow, it’ll be good for investors of both the firm and the ETFs it’s weighed in.