Is Moderna Headed for a Breakout?
A level of support and a resistance line have created an ascending triangle in the chart of Moderna, Inc. (MRNA). If the stock breaks through this res...
A level of support and a resistance line have created an ascending triangle in the chart of Moderna, Inc. (MRNA). If the stock breaks through this resistance, a breakout is expected. Read more to learn how to take advantage of this trading opportunity.
Moderna, Inc. (MRNA) is a commercial-stage biotech company. The firm's mRNA technology was rapidly validated with its COVID-19 vaccine, which was authorized in the United States in December 2020. Moderna had 24 mRNA development programs as of early 2021, with 13 of these in clinical trials.
MRNAâs COVID-19 vaccine has demonstrated strong uptake in several countries where it received authorization for temporary use over the past few months. Management expects more than $19 billion in vaccine sales for 2021. In addition, it has advance purchase agreements in place with several countries for 2022 worth $20 billion.
As of the most recent quarter, MRNA had $8 billion in cash compared to only $433 million in long-term debt. From a growth standpoint, sales surged 6,456% year over year in the second quarter. Analysts expected revenue to surge another 8,216% year over year in the current quarter.
These growth figures have led to a Growth Grade of B in our POWR Ratings system. In terms of valuation, the stock appears undervalued based on its forward P/E of 13.81. The stock was showing bullish momentum from April to early August, but performance has been mixed since, as you can see from the chart below.
Take a look at the 6-month chart of MRNA below with my added notations:
Chart of MRNA provided by TradingView
Over the past couple of weeks, MRNA has stalled at $413 resistance area (red) multiple times, while also forming a trend line of support (green). Together, these two lines have created an ascending triangle.
Eventually, MRNA will have to break either the $413 resistance or the triangle support. A long trade could be made on a break above $413. A break below the trendline would be an opportunity to enter a short trade.
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MRNA shares were trading at $397.12 per share on Friday morning, down $3.18 (-0.79%). Year-to-date, MRNA has gained 280.13%, versus a 20.52% rise in the benchmark S&P 500 index during the same period.
About the Author: Christian Tharp
I am an expert stock market coach having helped over 4000 beginner and advanced traders & investors from around the world take control of their financial futures. I also write stock market related articles for the Adam Mesh Trading Group and Yolo Publishing.