Moderna shares remain in a bull market but the current price does not represent a good value for long-term investors

Written by: Stanko Iliev
January 12, 2021
  • Moderna announced that MHRA had approved its COVID-19 vaccine
  • Moderna's future cash flows have already been priced into the valuation of its shares
  • If the price falls below the $100 support level, it would be a firm "sell" signal

Moderna Inc. (NASDAQ: MRNA) reported this Friday that its COVID-19 vaccine has been approved for emergency use by the United Kingdom’s medicines regulator. Despite this, Moderna shares are still trading significantly lower than the high of $178.50 per share in early December.

Fundamental analysis: The current share price does not represent a good value for long-term investors

Moderna is an American biotechnology company that focuses on drug discovery, drug development, and vaccine technologies based exclusively on messenger RNA (mRNA). Moderna shares remain in the investors’ focus since the company has announced in March 2020 that it could have a COVID-19 vaccine ready in a few months.

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Moderna shares have advanced from $47 above $178 since May 2020, and the current price stands around $113. This Friday, the company has announced that its COVID-19 vaccine has been approved by the Medicines and Healthcare products Regulatory Agency (MHRA) in the United Kingdom.

The MHRA continually monitors all COVID-19 vaccines, and it is important to say that this Moderna vaccine works by injecting a small part of the COVID-19 virus’ genetic code to create antibodies.

“Today’s approval brings more encouraging news to the public and the healthcare sector. Having a third COVID-19 vaccine approved for supply following a robust and thorough assessment of all the available data is an important goal to have achieved, and I am proud that the agency has helped to make this a reality,” said MHRA Chief Executive Dr. June Raine.

Moderna will undoubtedly profit from its COVID-19 vaccines, but the current share price does not represent a good value for long-term investors. There are some apparent risks when it comes to investing in Moderna shares, and maybe it is not the right moment for buying this stock.

Some analysts say that Moderna’s future cash flows have already been priced into its shares valuation. If Moderna generates COVID-19 revenue less than previously estimated, the stock price will be at much lower levels.

Moderna is highly-dependent on delivering its COVID-19 vaccine, and the current valuation of Moderna raises questions. Technically looking, Moderna shares could advance above $120 resistance this January, but with a $45B market capitalization, this stock is expensive, in my opinion.

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Technical analysis: $100 represents a very strong support level

My opinion is that this is still risky stock, and if you decide to buy Moderna this January, you should use a “stop-loss” order.

Data source: tradingview.com

The critical support levels are $100 and $80; $120 and $140 represent the resistance levels. If the price jumps above $120, it would be a signal to buy shares, and the next target could be around $130.

On the other side, if the price falls below the $100 support level, it would be a firm “sell” signal.

Summary

Moderna reported this Friday that its COVID-19 vaccine had been approved for emergency use by the Medicines and Healthcare products Regulatory Agency (MHRA) in the United Kingdom. Technically looking, Moderna shares could advance above $120 resistance this January, but there are some apparent risks when it comes to investing in Moderna shares currently. Moderna still operates with a loss, and if we compare the total equity of 2.7B with the current market capitalization, we can conclude that this company is not cheap.