Moderna: Bullish Flag Ahead of Q2 2022 Earnings Report

Pharmaceutical company AstraZeneca plc last week reported second-quarter 2022 fiscal year revenue of $10.8 billion, a 31% jump over the same period last year. Reported earnings per share (EPS) for the quarter fell 45% y/y to $0.23, while core EPS skyrocketed 92% y/y to $1.72.

On Wednesday, Moderna Inc., a company operating in the same sector as AstraZeneca plc, will also report its fiscal year 2022 second quarter earnings, prior to the market open. Moderna is expected to report its first drop in sales since it started making big money selling its Covid-19 vaccine.

In its previous Q1 2022 report, Moderna Inc. reported diluted earnings per share (EPS) soaring 202% y/y to $8.58, while net income also jumped 200% to reach $3.7 billion. The company reported revenue for the quarter jumped 213% to $6.1 billion. Sales of Moderna’s COVID-19 vaccine products in the first quarter of 2022 were $5.9 billion, compared with $1.7 billion in the same quarter of 2021.

The market remains uncertain about what will happen this year for Moderna. According to Zacks Investment Research forecasts, the biotechnology company will post quarterly earnings of $4.50 per share, representing a year-over-year change of -30.3%. Revenue is expected to be $3.89 billion, down 10.7% from last year’s quarter. The Zacks Consensus forecast suggests that analysts have recently become bearish on the company’s earnings outlook. This has resulted in an ESP Income of -0.22%, with the stock currently having a Zacks Rating of #3(hold).

As the pandemic has subsided, the hype surrounding Covid-19 vaccine makers has waned and attention will turn to how demand is shaping up and whether the government is still committed to tackling the sub-variants. Moderna said it expects to secure slightly more orders in the second half, compared to the first. The company announced one major new deal this year after agreeing to sell 66 million doses of its vaccine (appr. $1.74 billion) to the US government while continuing its booster program, with the government having the option to buy another 234 million doses based on the initial round price (worth $6.2 billion).  That would give some insight, though, that the government remains committed to continuing ongoing vaccination. Moderna hopes to release three respiratory medications in the next two to three years, if all goes to plan. A new vaccine targeting the BA.4/5 sub-variant is in progress.

Technical Overview

Moderna shares are currently trading around the $165.00 area in a bullish flag pattern, having hit their highest level in more than two months at $180 last month. The $180 level could be a tough barrier to break, if the expected earnings report misses expectations. But on the other hand, if these key figures are better than expected, the stock price will be helped. The main barriers to the $115.48 rebound are at the $187.98 structural resistance and the 200-day EMA. If both barriers are crossed, Moderna’s price could be in reversal mode for the short term and potentially pursue the 38.2% retracement level around $260.00.

Earlier, a break of the resistance at 152.61 last month brought  technical attention to a broken bearish structure, that the rebound still has at least some strength to creep to the upside. On the downside, a move below the $151.43 minor support would bring the bias back to the downside to test the 135.33 price and the 115.48 low.

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Ady Phangestu

Market Analyst – HF Educational Office – Indonesia

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