Stock of the week - Moderna (02.12.2021)

Emergence of a new coronavirus variant - Omicron - that is said to be more transmissible and have more severe symptoms triggered volatile moves on the global financial markets. Moderna (MRNA.DE) was one of the big winners of the situation with the company's stock being the top performer in S&P 500 index since Omicron news hit the market. Let's take a closer look at drivers behind moves of the US vaccine maker.

Omicron fears

While new variants of Covid emerge from time to time, Omicron variant is seen as especially dangerous. First reports said that it is more transmissible and causes more severe symptoms than other variants, like Delta. It was also said that it may be resilient to currently available vaccines and treatments. An interview of Moderna CEO, Stephane Bancel, with Financial Times is considered to be a trigger of Tuesday's sell-off. Bancel repeated what has been said a few times already - available vaccines may be less effective against Omicron and developing a new one on a mass scale may take months. He also said that most researchers did not expect such a highly mutated variant to emerge within the next year or two.

Moderna is not sitting idle

However, comments made by Paul Burton, Chief Medical Officer of Moderna, earlier over the weekend showed that the company is not sitting idle. Burton said that Moderna is currently evaluating whether higher-dose booster shots will prove effective against Omicron and that the company is ready to develop a brand new vaccine for this variant in early 2022 if needed. Development of a brand new vaccine would be a big revenue boost for Moderna, especially if Omicron turns out to be as dangerous as believed. 

Initial hype wanes

A look at the performance of S&P 500 companies since Friday last week shows that Moderna is in the lead. Stock of the company gained 13.6% since Wednesday's close. However, it should be noted that the stock gained over 32% between Wednesday, November 24 and Monday, November 30 following comments made by the company's Chief Medical Officer over the weekend. Gains have been erased on Tuesday and Wednesday. On one hand, declines were driven by less optimistic comments from Moderna's CEO on Tuesday. On the other hand, news that Moderna lost appeal in patents case sent the stock over 10% lower on Wednesday.

Moderna gained over 30% on Friday and Monday combined. However, big part of those gains was erased on Tuesday and Wednesday. Nevertheless, the stock remains S&P 500 performer over the past week. Source: Bloomberg

Technical Analysis

Shares of Modern extended recent upward correction following the emergence of the Omicron coronavirus variant. Range of the correction exceeded the range of the previous largest one in the current downward impulse. Stock managed to climb and test an important price zone ranging above the 50% retracement of the downward impulse launched at the beginning of August 2021. However, a break above the zone was not sustained and stock pulled back below it on Tuesday and Wednesday this week. Current pre-market quotes point to an around 4% bearish price gap at the opening of today's Wall Street session. A failure to break above the aforementioned price zone suggests that stock may resume the downward trend. Near-term support zone to watch can be found at $290.00. 

Source: xStation5