Moderna: Warns on Revenue

PREMIUM SUBSCRIBERS:  Note I'll be sending out a new stock recommendation this morning. Until then, we have to take the bad news with the good when it comes to buying and selling stocks...

Shares of Moderna (MRNA) fell 13% this morning before the start of trading. The company reported lower than expected Q3 profits of $7.70 a share,  compared to forecasts by analysts and myself of $9.05 a share. The company also reported lower than expected revenue of $5 billion, compared to projections of $6.2 billion.

Moderna also lowered its revenue outlook for this year (2021), saying it expects sales of $18 billion. In prior months, the company had said it could generate sales of up to $20 billion.

It sounds to me like Moderna experienced a bottleneck in its supply chain, causing it to "miss" on the metrics mentioned above.

"Key variables impacting output include longer delivery lead times for international shipments and exports that may shift deliveries to early 2022, [along with] temporary impact from expansion of fill/finish capacity [i.e. bottling the vaccine for distribution], and ramp up of product release to market."

Under pressure from governments and health activists, the company said it is also starting to prioritize deliveries to low-income countries so people there can receive the same protection from the virus as the developed world.

Vaccine for Kids, Booster Market

On a more positive note, Moderna said interim clinical data from Phase 2/Phase 3 studies show that their COVID vaccine for kids ages 6 to 12 shows 100% efficacy two weeks after the first dose.

The company also said it expects commercial booster shots of teh vaccine to make up as much as $2 billion in revenue by the fall of 2022.

Revenue for the year could be in the range of $17 billion to $22 billion - which exceeds the upper end of the $20 billion expected by analysts.

Stock Outlook

Today's results were an unfortunate surprise to me. But the pre-market reaction of the stock matches what I've said in prior updates about the stock (most recently, my Livestream event a few weeks ago) that the stock may be drawn lower, to the $250 - $260 level.

In a different environment, I think Wall Street would largely look past the short-term schedule disruptions. But right now, traders are focused on post-COVID recovery plays. Moderna, as such, is "old news" and will likely remain in the market's backwater until we begin 2022.

I wouldn't sell the stock if I owned it (and it remains in the goodBUYs portfolio as well). But we'll likely be presented with a better buying opportunity by being patient.

Best of goodBUYs,

Jeff