As Moderna joins the S&P 500, is it time to buy?

on Jul 16, 2021
  • Moderna will become one of the latest companies to be added to the S&P 500 Index on 27th July.
  • The MRNA stock price spiked to trade at an all-time high of $288.88 per share after the news.
  • Moderna’s market value is up more than 310% since it announced its Covid vaccine late last year.

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Moderna Inc. (NASDAQ:MRNA)became the latest addition to the S&P 500 Index. The company will officially join the list on 27th July to start enjoying the benefits of belonging to an elite class of companies.

The MRNA stock price surged more than 9% on Friday following the announcement as investors swooped in to act on the news. Moderna is one of the leading developers of the Covid-19 vaccine, having announced its vaccine in November last year. The stock has since added more than 310% in market value.

Based on the current progress in the vaccine deployments and the rising cases of the delta variant, the company could continue to benefit from the vaccine for several quarters. Therefore, the MRNA stock could continue rising as more investors will be interested after joining the S&P 500 Index.

Should you invest in MRNA shares in July 2021?

From a valuation perspective, Moderna shares trade a relatively steep price-earnings ratio of 226.54. However, looking at its forward P/E ratio of just 14.27, its current valuation becomes more attractive, making it one of the best investment opportunities to make in the pharma industry this month.

In the company’s most recent quarterly results, sales grew by more than 24,000% from the preceding quarter, while earnings increased by 907% sequentially. It explains why investors are willing to pay a high premium for MRNA shares.

Source – TradingView

Technical overview: the MRNA stock price seems poised for more upward movement

Technically, Moderna’s stock price seems to have recently spiked to break out of an ascending channel formation. The stock price has now entered overbought conditions in the 14-day RSI.

Investors can target profits at approximately $288.98 or higher at $300.47. The key support levels are $271.19 and $260.28.

Bottom line: Moderna shares look attractively valued

Although the MRNA stock price has gained significantly since rolling out its covid-19 vaccine. Its shares still trade at an attractive forward P/E ratio of just 14.27. Therefore, it may not be too late to buy MRNA shares now, even after Friday’s 9% spike.