Rising Covid Cases, Talk Of Second Booster Drive Moderna Stock Higher. Will The Rally Continue?

Covid-19 vaccine maker Moderna stock (NASDAQ: MRNA) has rallied by close to 29% over the last week (five trading days), compared to the S&P 500 which was up by about 6% over the same period. The stock also remains up by about 18% over the past month. There are multiple factors driving the stock higher. Moderna stock took a beating over the last few quarters, falling by over 60% from peak levels seen in August 2021, as investors started looking beyond Covid, repositioning portfolios for the realities of surging commodity prices, and rising interest rates. However, the recent surge in Covid cases in regions including China and the E.U., which is apparently driven by a new subvariant of the omicron called BA.2, is likely giving investors some pause, putting vaccine stocks back in focus. Moreover, investors are likely a bit more confident about the longer-term durability of Moderna’s lucrative vaccine revenue streams, as the virus mutates and periodic booster doses likely become the norm. Many countries including Israel and Sweden are already recommending the fourth dose of Covid-19 shots and Japan recently signed a contract with Moderna for another 70 million doses for booster shots. Moreover, Moderna and rival Pfizer requested the U.S. FDA last week to authorize a second booster dose for all adults.

However, now that MRNA stock has seen a rise of about 18% over the last month, will it continue its upward trajectory in the near term, or is a decline imminent? Going by historical performance, there is a slightly higher chance of a decline in MRNA stock over the next month. Out of 263 instances in the last three years that MRNA stock saw a twenty-one-day rise of 18% or more, 124 of them resulted in MRNA stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 124 out of 263, or only about a 47% chance of a rise in MRNA stock over the coming month, implying that the stock does not look like a buy for the near term. See our analysis on Moderna Chance of A Rise for more details.

Calculation of ’Event Probability’ and ’Chance of Rise’ using last three years data

  • After moving 29% or more over five days, the stock rose in the next five days on 52% of the occasions.
  • After moving 31% or more over ten days, the stock rose in the next ten days on 44% of the occasions.
  • After moving 18% or more over a twenty-one-day period, the stock rose in the next twenty-one days on 47% of the occasions.

This pattern suggests that MRNA stock may see lower levels in the next month. We estimate Moderna valuation to be around $220 per share, about 20% ahead of the current market price.

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