The global markets have recently been set on fire with speculation about a possible pandemic. Though this can cause great anxiety for the average person, it also makes a great buying opportunity for some stocks. One of the stocks to consider during this downturn is Moderna, a therapeutics-based biotechnology company out of Cambridge, Massachusetts. Moderna specializes in creating unique and targeted therapies for various maladies. It can make a great addition to any portfolio who is trying to diversify in the midst of this downturn. Institutional money has been hard-presses to find any problems with the company and many have set the target price at around $32, substantially higher than where it stands right now. This could signal a great time to buy for people interested in utilizing this global crisis to their advantage. It will be interesting to see how it plays out.
The company has also shown an unprecedented ability to bring products to the market faster than traditional means. Upon receiving the genetic sequence for COVID-19, 10% of the company’s workforce was dedicated to around-the-clock creation of a potential vaccine. Incredibly, it only took the company 42 days to create the vaccine from the first time that they received the DNA sequence. This is undoubtedly an impressive feat in an often glacial-paced industry. It remains to be seen how effective or safe the vaccine will be, but the turnaround time is impressive nonetheless. There is hope that this new pace increases the speed of treatment for those afflicted with the virus. This could also turn into a profitable venture for the company, if they are able to help to stem the disease. It is also good showcasing of the brisk pace that the company can move when pressed. This bodes well for their ability to adapt and change given a series of unique challenges.
While the feat to get the vaccine in testing in just 42 days is quite impressive, it seems that the progress is going to be slowed by the bureaucracy. The latest estimates put possible approval time at around 18 months. While this is relevant for public safety, it underscores the importance of moving swiftly. Though the technological prowess of the company has proven to be impressive, it will be a long time before the product is brought to market. Though it is clear that the company has already benefited from the scare, seeing a 36% increase in the month of February. But it is not clear that the company would even be able to profit off of a working vaccine. The move to develop was as much about goodwill as it was about making money. There is hopes that Moderna will be rewarded for its attempts to benefit the population.
Professional investors seem bullish on the prospects of the company with many major players issuing reports calling the stock a ‘buy’ or ‘hold’. BofA/Merrill had rated the stock from a ‘buy’ until it recently changed the rating to neutral. Overall it seems that most institutional money is bullish on the long-term prospects of the company. It remains to be seen how the company wants to manage its time and capital. Though altruistic ventures like the vaccine are nice, they are no guarantee of profit. It seems that there is an important balance to strike between doing the right thing and making money. In order to keep the company afloat it is important to develop consistent revenues. The medical space is a notoriously hard place to gain a foothold, so there is hope that the management has long-term plans for increased profitability and market share.
A Squeeze in Different Markets
Various markets have been hit by COVID-19 particularly hard. While other companies have fared poorly, Moderna has been able to use the crisis to its advantage. A trip to the local grocery store will reveal that basics like toilet paper are hard to keep in store. The cleaning sector is another industry that has seen many of their stocks uptick. Panic has struck the heart of many consumers causing them to empty out store shelves. Toilet paper, hand sanitizer, and stick vacuums have seen rapid price fluctuations throughout the marketplace. This has made laboratory processes more difficult but could also provide opportunities for crafty companies. Moderna has yet to post big numbers in terms of revenue but is playing the long game for success. The small team has made itself very agile in wake of the disease, an advantage that not many companies have. It remains to been seen how the lean company can capitalize on this edge.
Price fluctuations are not the only concern for pharmacists and retailers. It remains to be seen how effective that recent measures to curb the pandemic will be. But there is a possibility that a longer bear market is on the horizon. The adaptability of Moderna and other biotech companies will make the difference in saving both human lives and carving out profitability in otherwise inhospitable markets. This also provides the company a great opportunity to generate both goodwill and public perception. Regardless of whether the vaccine proves to be profitable or not, it could increase the company’s valuation. It is important that markets are assuaged during these times and solid companies that can meet the needs of consumers quickly can go a long way to fulfill these needs.
Moderna is well positioned to take advantage of this recently-anointed bear market. It is up the management to navigate these times correctly and turn them in to a boon for the company. They have cash on hand to get the job done and hope to continue seeing increases in revenue once more products hit the marketplace. This is a good stock to keep your eyes on.