07 May 2021

Moderna Shares Slide, Despite 1st Quarterly Profit

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What’s happening: Shares of Moderna fell on Thursday, despite the company reporting its first profitable quarter.

What happened: Moderna not only recorded profits for the first quarter, but also raised the 2021 sales outlook for its covid-19 vaccine, as various countries ramp up their inoculation drive.

Investors grew concerned, however, about the US proposing to temporarily lift patent protection for covid-19 vaccines.

How were the results: The Cambridge, Massachusetts-based company swung to a profit in the first quarter.

  • Revenues grew to $1.9 billion, from $8 million in the same quarter last year. Despite this healthy growth, the figure fell slightly short of market views of $2.04 billion.
  • Net income came in at $1.2 billion, or $2.84 per share, versus a GAAP net loss of $124 million, or 35 cents per share, in the year-ago quarter. The figure exceeded the Street expectations of $2.39 per share.

Why it matters: Investors were not surprised by the phenomenal growth in Moderna's revenues in the first quarter, as sales of its covid-19 vaccine contributed $1.7 billion to the top-line, with 102 million doses sold during the period.

The company also received grants worth $190 million from the BARDA (Biomedical Advanced Research and Development Authority) and collaboration revenues of $10 million in the latest quarter, up from $8 million in grants and collaboration revenues in the year-ago period.

As expected, Moderna's costs rose sharply to $401 million, mainly due to R&D expenses. The company’s SGA (selling, general, and administrative) expenses also grew over threefold to $77 million.

Management said they were looking to deliver 200-250 million doses of the covid-19 vaccine in the second quarter. For the year, Moderna expects to manufacture between 800 million and 1 billion doses of its vaccine, with up to 3 billion doses next year.

Management projected $19.2 billion in revenues from its covid-19 vaccine in 2021. The forecast is based on its Advance Purchase Agreements, which the company has already signed for the year.

Moderna recently said that the single booster dose of its covid-19 vaccine had generated a favourable immune response for variants of the coronavirus identified in Brazil and South Africa.

How shares responded: Moderna’s shares fell 1.4% to close at $160.50 on Thursday, following the release of quarterly results. Moderna and other vaccine makers experienced pressure on their stock due to US President Joe Biden's proposal to waive intellectual property rights for covid-19 vaccines.

What to watch: Investors will monitor Moderna’s vaccine sales as more nations ramp up their vaccinations. The company is also working to develop a new version of its vaccine that can be stored for longer at refrigerator temperatures, making its vaccine easier to distribute in developing counties.

The Markets Today

     

US stocks will be in focus today, ahead of the highly anticipated NFP (nonfarm payrolls) report.

Context: Wall Street closed higher on Thursday, following an upbeat reading on weekly jobless claims.

Details: The gains in Thursday’s session came after the US Labor Department reported stronger-than-expected data for jobless claims. First-time claims for jobless insurance declined to 498,000 in the week ending May 1, reaching a new pandemic low and much better than the consensus estimate of 527,000.

The Nasdaq 100 has remained under pressure this week, with investors shedding growth stocks from their portfolios. The tech-heavy index recorded its fourth consecutive negative session on Wednesday and is in the red for the week. However, the Dow Jones index is on course to ending its two-week losing streak.

Kellogg Company’s stock gained more than 7% on Thursday, after the company reported upbeat quarterly results and boosted its outlook. Shares of PayPal Holdings also rose around 2% following better-than-expected first-quarter results and raised guidance.

The Dow Jones index climbed more than 300 points to reach another record high after hitting a record close during the earlier session. The 30-stock index settled at 34,548.53 on Thursday. The S&P 500 rose 0.82% to 4,201.62, while the Nasdaq 100 gained 0.82% to close at 13,613.73.

What to watch: Investors await America’s jobs report. The US economy, which added 916,000 jobs in March, is expected to create 978,000 jobs in March. The country’s unemployment rate is projected to decline to 5.8% in April, from 6% in March.

Rising covid-19 cases remain one of the top concerns for markets, with total global infections exceeding 155.6 million.

Other Markets: European trading indices closed mostly higher on Thursday, with the FTSE 100, German DAX 30, and French 40 up by 0.52%, 0.17% and 0.28%, respectively. However, the STOXX Europe 600 traded lower by 0.12%.

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Futures at 0400 (GMT)

What else to watch today

     

Germany’s balance of trade, industrial production and current account, South Africa’s foreign exchange reserves and SACCI business confidence index, France’s balance of trade, industrial production, payroll employment in the private sector and current account, Spain's industrial production, China's foreign exchange reserves, Italy’s retail sales, UK’s construction PMI, Mexico's consumer price inflation, auto exports, car output and consumer confidence, India’s value of deposits, foreign exchange reserves and value of loans, Brazil’s retail sales, auto sales and car production, Canada’s employment change, unemployment rate and Ivey Purchasing Manager's Index, Russia’s foreign exchange reserves and inflation rate, Turkey’s treasury cash balance as well as America’s ISM New York index, Baker Hughes crude oil rigs and consumer credit.

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