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Moderna Inc. share price resilient despite drop in quarterly revenue and earnings

In this article we review the Moderna results and how the share price has reacted to the news.

Source: Bloomberg

Moderna Inc’s quarterly results

Moderna Inc, the biotechnology company focused on messenger ribonucleic acid (mRNA) medicines, has released results for the fiscal quarter ending September 2022, a summary of which is as follows:

  • Adjusted earnings per share (EPS) of $2.53 for the quarter, consensus estimates from Refinitiv data had expected adjusted EPS of $3.29

  • Revenue declined by 32.3% to $3.36 billion from a year ago, while estimates from Refinitiv data had expected revenue of $3.53 billion.

  • Net income of $1.04 billion was recorded over the reporting period

Group results fell short of consensus resulting in a knee-jerk market reaction, whereby the share price fell initially before managing to claw back losses.

The company has seen a decline in its sales of Covid-19 vaccines to weigh on revenue. Write downs pertaining to past shelf life Covid products also dramatically increased the group’s cost of sales, which along with increased research and development expenses as well as a higher effective tax rate pressured earnings relative to the prior year’s comparative reporting period.

How to trade Moderna Inc shares

Source: Refinitiv
Source: Refinitiv

As of the 3rd of November 2022, a Refinitiv poll of 19 brokers and analysts suggest the stock to be a ‘hold’ at current levels. There are no sell recommendations on the company.

The long-term price target mean of $207.29 suggests the share price of Moderna to currently be trading at a 41% discount to its assumed longer dated fair value.

Source: IG
Source: IG

Most IG clients (82%) with open positions on the stock, as of the 3rd of November 2022, expect the share price to rise in the near term, while 18% of IG clients with open positions on the stock expect the share price of Moderna to fall.

Moderna Inc. – Technical View

Source: IG Charts
Source: IG Charts

The share price of Moderna has recently broken out of the consolidation highlighted by the grey rectangle on our chart. The red arrow highlights the 20-day simple moving average crossing above the 50 day simple moving average, a suggestion that the short to medium term trends are moving from down to up. The price is also now trading above the 200 day simple moving average (blue line), an indication that the longer term down trend may now be broken.

The bullish indications suggest that 158.80 could be the next resistance target from the move, a break of which, confirmed with a close could unlock further gains towards the 179.00 level. Traders who are long might consider using a close below the 142.00 support level as a stop loss indication for the trade.

In summary:

  • Moderna Inc quarterly revenue and earnings have declined significantly against the prior year’s comparative period

  • Revenue and EPS for the reporting period both fell short of consensus estimates

  • Analyst ratings suggest the share price to be a hold at current levels

  • The majority of IG clients with open positions on the stock expect the price to rise in the near term

  • The share price has broken out of a near term consolidation with 158.80 the next upside resistance target from the move

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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