On Wednesday, Moderna Inc. (NASDAQ:MRNA) shares plunged more than 6% after Sweden and Denmark paused the company’s covid vaccine use for younger age groups. Sweden’s health agency said it is pausing Moderna’s covid vaccine use for people born in 1991 and later.
On the other hand, Denmark, which continues to use the Pfizer Inc. (NYSE:PFE) and BioNTech covid vaccine for age groups between 12-17, said it will not use Moderna for people aged below 18 years, Reuters reported.
Moderna shares have plummeted more than 32% since 23rd September amid reports linking its Covid-19 vaccine with increased cases of heart inflammation in people who received the second dose.
However, other research data, yet to go through peer reviews, indicates young males aged 20 and below are six times more likely to contract myocarditis, a condition that causes heart inflammation, after contracting covid-19, compared to those vaccinated.
Is the stock price impact overblown?
The current decline in the stock price has pushed Moderna to trade an exciting forward P/E ratio of 11.51, making it an attractive option for value investors. However, analysts expect its earnings per share to fall by 26% this year, before rising at an average annual rate of 16.80% over the next five years.
Therefore, although the stock seems competitively valued, the less attractive short-term growth prospects could prevent it from making a quick rebound.
Source – TradingView
Will the 100-day MA support hold?
Technically, Moderna shares seem to have plunged to trade next to the 100-day moving average. Moreover, the stock has also plunged closer to the oversold conditions of the 14-day RSI, creating an exciting opportunity for a rebound.
However, with the stock facing significant bearish market sentiment amid the recent developments, the 100-day MA is likely to be breached.
Therefore, investors can target extended declines at about $271.92, or lower at $218.54. On the other hand, $352.43 and $406.44 are crucial resistance zones.
There could be a better buying opportunity
In summary, although the recent decline in Moderna stock price creates a compelling opportunity to buy, the downward movement seems to continue further before finding support.
Therefore, it may be best to wait for the price to retest current support levels before buying.
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