You may know the name Moderna (NASDAQ:MRNA) very well thanks to the company’s blockbuster coronavirus vaccine. That was the biotech’s first commercialized product, highlighting its expertise in messenger RNA technology. This involves teaching the body to make proteins that will prevent or fight a certain disease.
Moderna launched its coronavirus vaccine in early pandemic days and saw revenue and stock performance skyrocket. As demand declined later in the crisis, the company’s earnings and stock price also suffered. But Moderna took steps to turn things around, including cost cuts, a focus on oncology and rare-disease candidates, and the release of new products. All of this boosted investor optimism, putting the stock on track for triple-digit gains this year.
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That’s fantastic, but news this week prompted the stock to drop 17% in one trading session. After stumbling, is Moderna stock a buy on the dip? Let’s find out.
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Moderna’s coronavirus vaccine
First, a quick note on Moderna’s path so far. As mentioned, the company jumped into the spotlight as it developed and commercialized a coronavirus vaccine. That product generated billions of dollars in revenue for the biotech and pushed it to profitability. As demand for vaccines declined, however, revenue slipped, Moderna swung to a loss, and investors turned away from the stock.
Meanwhile, Moderna reduced costs within its vaccine program, launched new products such as the most recent — a flu vaccine for the current season — and used revenue from its respiratory vaccines to fund its robust pipeline. One particular area caught investors’ attention, prompting them to return to Moderna stock, and that’s oncology.
And this brings me to the Moderna story in 2026. The company is studying its personalized cancer vaccine candidate, using the mRNA technology applied throughout its pipeline, in 10 clinical trials. The market has paid particular attention to the most advanced, a phase 3 trial combining Moderna’s intismeran autogene with Merck‘s Keytruda. News back in August that the companies met primary endpoints pushed Moderna stock to a 180% gain in one trading session.
Data leaked from a Moderna study
Just this week, however, news of leaked data from the study had the opposite effect, resulting in a 17% drop in one session. That said, the leaked news wasn’t negative. In fact, Moderna and Merck reported the drug combo reduced the risk of recurrence of death by 42% for certain melanoma patients — this is compared to treatment with Keytruda alone. After six months, this risk was reduced by 58%, the study showed. And Moderna and Merck’s combined treatment cut the risk of cancer spreading to distant parts of the body by 38%.
In August, the companies said they would speak with regulators regarding the filing of submissions for the treatment.
So why did the stock fall on this week’s news? Moderna shares are very sensitive to the release of trial data since the company is still in its early stages of commercializing products. Today, it has four products commercialized in the U.S., and they are all in the respiratory vaccine category. The idea of leaked trial data may have worried some investors before they even took a look at the data — and this may have prompted them to lock in gains on the stock after its fantastic run.
Is Moderna stock a buy?
So, right now, is Moderna a buy on the dip? It’s important to keep in mind that the stock still has climbed more than 500% this year and is trading at about $200, well above the average Wall Street 12-month price estimate of $135. This allows us to put the recent decline into perspective.
The dip represents a buying opportunity for the long-term investor aiming to open a position or add a few shares to a current holding. But Moderna could see other pullbacks ahead, considering the extent of its gain this year. As I mentioned above, the stock is sensitive to any clinical trial data reports — and given the number of candidates in the pipeline, many such reports lie ahead. It’s important to be comfortable with the idea of potential volatility before investing in Moderna. Biotech investors who accept that may want to progressively build a position in this exciting player starting today and on future dips.
Should you buy stock in Moderna right now?
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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Merck and Moderna. The Motley Fool has a disclosure policy.
