Insights

Why Moderna Shares Rallied Nearly 6% on Monday

What happened
Shares of biotech Moderna (NASDAQ: MRNA) ended today’s session higher by 5.7%. Though there was no news about the company, a confluence of closely related developments is providing a tailwind for the stock.
So what
Much of today’s credit for Moderna’s gain can go to pharmaceutical giant Pfizer (NYSE: PFE), not for what happened, but for what didn’t. On Friday, the company announced its oral antiviral drug Paxlovid did not prove to be an effective treatment for COVID-19. In that Moderna is also heavily involved in the battle against COVID, any failure from a competitor translates into opportunity for a business with a similar product already on the market.
In this same vein, Modena filed an official request with the Food and Drug Administration on Thursday to market its COVID vaccine to children between the ages of 6 months and 6 years, and filed a comparable request with European Union regulators on Friday. While neither request is guaranteed to be granted, both pose growth opportunities.
Image source: Getty Images.

At the same time, coronavirus cases are rising again, here and abroad, prompting discussions regarding the need for another round of booster shots. While the omicron variant of the virus is still the prevalent one, the delta variant is spreading again, and two new sub-strains of the omicron variant have been detected within the United States.
Although it’s not clear to what degree Moderna’s (or any other manufacturer’s) vaccine will combat new strains, Moderna’s chief medical officer Paul Burton said during Sunday’s episode of Face the Nation, “We are confident that by the fall of this year, we should have large amounts of that new booster vaccine that will protect against omicron and other variants.”
Combined, these factors all contributed to today’s sizable rally in an environment that was otherwise tepid.
Now what
Don’t be too quick to jump to a bullish conclusion here, however.
While today’s advance was big, the move didn’t even carry the stock above Friday’s open. Shares are still down more than 70% from August’s peak, and within sight of 52-week lows reached in March. Daily volatility is nothing new here.
Neither is the company’s progress with its coronavirus vaccines; investors widely anticipated last week’s authorization filings. As for Pfizer’s COVID treatment failure, those proverbial dots don’t perfectly connect. Moderna’s focus has been on COVID vaccines, and Pfizer’s Paxlovid post-infection therapy would have had little impact on the need for those vaccines even if it were successful.
In other words, there’s no reason to think today’s 6% surge marks the end of what’s become an established downtrend and/or the beginning of a new uptrend.
James Brumley has no position in any of the stocks mentioned. The Motley Fool recommends Moderna Inc. The Motley Fool has a disclosure policy. –

What happened

Shares of biotech Moderna (NASDAQ: MRNA) ended today’s session higher by 5.7%. Though there was no news about the company, a confluence of closely related developments is providing a tailwind for the stock.

So what

Much of today’s credit for Moderna’s gain can go to pharmaceutical giant Pfizer (NYSE: PFE), not for what happened, but for what didn’t. On Friday, the company announced its oral antiviral drug Paxlovid did not prove to be an effective treatment for COVID-19. In that Moderna is also heavily involved in the battle against COVID, any failure from a competitor translates into opportunity for a business with a similar product already on the market.

In this same vein, Modena filed an official request with the Food and Drug Administration on Thursday to market its COVID vaccine to children between the ages of 6 months and 6 years, and filed a comparable request with European Union regulators on Friday. While neither request is guaranteed to be granted, both pose growth opportunities.

Image source: Getty Images.

At the same time, coronavirus cases are rising again, here and abroad, prompting discussions regarding the need for another round of booster shots. While the omicron variant of the virus is still the prevalent one, the delta variant is spreading again, and two new sub-strains of the omicron variant have been detected within the United States.

Although it’s not clear to what degree Moderna’s (or any other manufacturer’s) vaccine will combat new strains, Moderna’s chief medical officer Paul Burton said during Sunday’s episode of Face the Nation, “We are confident that by the fall of this year, we should have large amounts of that new booster vaccine that will protect against omicron and other variants.”

Combined, these factors all contributed to today’s sizable rally in an environment that was otherwise tepid.

Now what

Don’t be too quick to jump to a bullish conclusion here, however.

While today’s advance was big, the move didn’t even carry the stock above Friday’s open. Shares are still down more than 70% from August’s peak, and within sight of 52-week lows reached in March. Daily volatility is nothing new here.

Neither is the company’s progress with its coronavirus vaccines; investors widely anticipated last week’s authorization filings. As for Pfizer’s COVID treatment failure, those proverbial dots don’t perfectly connect. Moderna’s focus has been on COVID vaccines, and Pfizer’s Paxlovid post-infection therapy would have had little impact on the need for those vaccines even if it were successful.

In other words, there’s no reason to think today’s 6% surge marks the end of what’s become an established downtrend and/or the beginning of a new uptrend.

James Brumley has no position in any of the stocks mentioned. The Motley Fool recommends Moderna Inc. The Motley Fool has a disclosure policy.

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