Moderna Weekly Options Trade Shoots Higher!

“Weekly Options” Members Profit Up 150% In 1 day!
More Could Be Expected!

Tuesday, July 20, 2021

by Ian Harvey

A Moderna Weekly Options trade has provided members with a potential profit of 150% within the trading day on Monday, despite a major market pull-back, based on several crucial catalysts.

Moderna is to be added to the S&P 500 which will cause mutual fund managers to re-buy stock, therefore producing short-term increase in demand for its stock. As well, a harder and wider vaccine push is obvious due to the effects of the delta variant and the Moderna vaccine is 96% effective in preventing COVID hospitalizations and deaths from Delta variant infections.

The stock price is likely to continue increasing for the near-term.

1. Added to S&P 500…..

On Friday, Moderna was slated to be added to the popular S&P 500 index effective before the beginning of trading on Wednesday, July 21. It will replace Alexion Pharmaceuticals, which is being acquired by healthcare giant AstraZeneca.

Moderna is entering the S&P 500 after reporting only one quarter -- its most recent -- of profitability as a public company.

The addition makes sense intuitively, given that the vaccine maker's market capitalization has shot well above $100 billion after its recent success.

One of the requirements for inclusion in the index is that a company’s most recent quarterly earnings as well as the sum of its trailing four quarters’ earnings must be positive. Before Moderna’s Covid vaccination was authorized it was still a development stage biotech with no products to sell.

In the past, the S&P 500 selection committee has often waited for more than one quarter after a company had met its earnings criteria to include a large cap stock in the benchmark. For instance, Tesla Inc., the largest company ever added to the S&P 500, became eligible for inclusion after reporting second-quarter earnings in July 2020, but was not added until Dec. 18 after an additional quarter of profitability.

2. Consequences…..

Managers of mutual funds that track the S&P 500 will need to buy shares of Moderna following its inclusion in the index. Their purchases could lead to a short-term increase in demand for its stock, thereby boosting its price.

3. Johnson & Johnson Struggles…..

Moderna appeared to be benefiting from the struggles of one of its key vaccine maker rivals. The Food and Drug Administration added a warning to Johnson & Johnson's COVID-19 vaccine noting that it had been linked in extremely rare cases to an autoimmune condition known as Guillain-Barre syndrome. With no similar link found to that illness for Moderna's coronavirus vaccine, investors were likely betting that these potential safety concerns could lead to higher demand for Moderna's drug.

4. Vaccines…..

The Cambridge, Massachusetts-based company has said its vaccinations are producing antibodies against the more easily transmitted delta form of the pathogen, though at a lower level than for the main virus. Moderna is also targeting new vaccines and drugs for other viruses like Zika and the flu as well diseases like HIV and cancer.

5. Future Earnings…..

On Thursday, Aug. 5, Moderna will report its earnings for the fiscal second quarter of 2021. Analysts are forecasting that the vaccine maker will reverse a year-ago loss to record $6.04 EPS on sales of nearly $4.3 billion this quarter -- revenue growth of more than 6,000%! 

6. Analysts’ Opinions.....

"Moderna is the Tesla of biotech," says Jefferies analyst Michael Yee, pointing to Moderna's impressive pipeline of product innovation.

Yee sees at least two medium-term catalysts for Moderna's stock price. First are the potential for COVID-19 booster shots out of Moderna, which could be discussed by management when the company reports earnings on Aug. 5.

"We see 2021 guidance increasing to $21 billion from $19 billion and expect positive commentary around boosters in development (potentially Delta next) and preparing for 2022 orders," Yee writes in a research note to clients. Yee believes the stockpiling of COVID-19 booster shots by the government would be a tailwind to players such as Moderna and Pfizer.

Meanwhile, Yee thinks investors shouldn't sleep on Moderna's efforts on flu vaccines.

"While the boosting [booster shot] debate will continue for the rest of the year, we do think the market will look to Phase I flu data by year-end. We think COVID infections probably start to rise again in winter as some protection wears down 6 [million]-8 million from March, but they will likely be mild. But Moderna is testing a multivalent influenza vaccine and has antibody titer data by year-end. We think this data will look very strong (very high titers) — and supports large Phase II/III in 2022/2023 for high PoS," Yee says.

The analyst has a $250 price target on Moderna's stock, but an upside target of $325.

"Our upside scenario of $325 considers high probabilities of success for each of the major areas and indications (vs. the base case)," explains Yee. "In this scenario, we assume MRNA's clinical candidates produce better-than-expected results in their ongoing programs, the prophylactic vaccine areas are significantly de-risked toward 90% PoS, and the cancer programs show positive early data, opening up a new area of R&D opportunity. We also note the potential for stock accretion on the race for Vaccine 2.0 against emerging COVID-19 variants."