Moderna Dips on Q2 Earnings But Can It Rip on a Short Squeeze?

Key Points

• Moderna shares fell 30% after it revised its 2024 product sales lower by $500 million due to low EU sales of its COVID-19 vaccine, potential deferred COVID-19 vaccine sales into 2025, and a more competitive environment for respiratory vaccines in the United States.
• Moderna is focused on the 2024-2025 COVID season and the U.S. launch of its FDA-approved RSV vaccine, which started shipping in July.
• Moderna is the most shorted healthcare stock in the S&P 500 index, with a 6.69% short interest.

Biotechnology company Moderna Inc. NASDAQ: MRNA stock rocked investors with a 30% drop following its second-quarter 2024 earnings release. The company disappointed investors when it revised its respiratory franchise revenue forecast lower by half a billion dollars. However, shares were able to bounce off their low of $78.07 and start to climb back. While COVID is no longer a pandemic, it is still a public health issue that gets more attention heading into the fall and flu season. The FDA is expected to announce approvals for updated COVID-19 vaccines modified for the KP.2 strain.

Moderna operates in the medical sector and competes with COVID and respiratory syncytial virus (RSV) vaccine makers Pfizer Inc. NYSE: PFE, BioNTech SE NASDAQ: BTNX and Novavax Inc. NASDAQ: NVAX.

Moderna: Pioneering Groundbreaking mRNA Technology

Moderna is the leader in messenger ribonucleic acid (mRNA) technology. mRNA medicines carry genetic blueprints to ribosomes in cells to produce therapeutic proteins and antigens that help the immune system fight diseases and prevent infections. Moderna can tailor entire mRNAs using its Sequence Designer module. This opens the door for the rapid development of personalized medicine and the flexibility to target specific diseases.

The pandemic helped Moderna demonstrate the effectiveness, speed of development, and potential of its mRNA technology after it proved successful with its COVID-19 vaccine. The company has a robust pipeline of mRNA-based candidates targeting infectious diseases, cancer, genetic disorders, and cardiovascular diseases. It's also invested in building scalable manufacturing capabilities that enable it to produce huge quantities of mRNA-based products.

Moderna’s mRNA Pipeline: Promising Vaccines and Therapies

Some of Moderna’s pipeline MRNA products include mRNA-1345, a vaccine targeting respiratory syncytial virus (RSV), a contagious virus spread through the air or direct contact. It causes cold-like symptoms but can be deadly for infants and older people. The FDA approved it for adults 60 and older, and it is set to launch in the fall of 2024.

MRNA-1083 is a flu + COVID vaccine in Phase 3. mRNA-1230 is a combination flu + COVID + RSV vaccine in Phase 1. mRNA-4157 is an individualized neoantigen therapy (INT) adjuvant melanoma in Phase 3 with a 50/50 global profit sharing partnership with Merck & Co. NYSE: MRK.

MRNA Stock Attempts a Rounding Bottom

The daily candlestick chart for MRNA illustrates the plunge from $118.10 to $102.90 in Q2 2024 earnings. Shares continued to sink to a low of $78.07 and attempted to form a rounding bottom pattern, lifting through $86.00. The daily relative strength index (RSI) has slowly crawled back above the 30-band after eight trading sessions. Pullback support levels are at $84.06, $80.78, $78.07, and $73.25.

A Top and Bottom Line Beat

Moderna reported a Q2 2024 EPS loss of $3.33, beating consensus estimates for a loss of $3.35 by 2 cents. GAAP net loss was $1.3 billion, down from a net loss of $1.4 billion in the year-ago period. Revenues sank 30% YoY to $241 million, beating $128.41 million consensus estimates. The company reported $184 million in revenue for its Spikevax COVID-19 vaccine, which is comprised of $162 million in U.S. and $22 million in international sales. This was a 37% YoY decline, but higher demand is expected in the fall and winter. Moderna has $10.3 billion in cash and cash equivalents.

The company is prepared for the upcoming vaccination season with ample time and supply. It also began the launch of its recently FDA-approved RSV vaccine, mRESVIA, in July 2024. The European Union (EU) adopted a positive marketing authorization for mRESVIA.

Moderna's Downward Revision Spooks the Market

Moderna revised its 2024 expected net product sales to $3 billion to $3.5 billion, down from an earlier forecast of $4 billion. The guidance cut is attributed to three factors: very low EU sales in 2024, potential revenue deferrals for certain international sales into 2025, and increasing competition for respiratory vaccines in the United States. This was the news that bombed the stock.

Research and development costs are expected to be around $4.5 billion for the full year 2024. CapEx is expected to be around $900 million. Cost of Sales is expected to be 40% to 50% of product sales for the year. Year-end cash and cash equivalents are expected to be around $9 billion.

Moderna remains focused on executing its 2024-2025 COVID season and RSV vaccine launch in the United States.

Moderna analyst ratings and price targets are at MarketBeat. There are 16 analyst ratings on MRNA stock, comprised of seven Buys, eight Holds, and one Sell. Consensus analyst price targets point to a 42.8% upside at $124.07. MRNA has a 6.69% short interest.