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Moderna (MRNA) Set to Join S&P 500 Riding on Vaccine Success

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Moderna, Inc. (MRNA - Free Report) is set to join the broader market index, S&P 500, effective Jul 21. The company came into limelight following the success of its coronavirus vaccine, mRNA-1273.

The company started 2020 with nearly $7 billion in market capitalization. As of Jul 15, the company had a market capitalization of $104.3 billion. The significant growth in the size of the company is primarily due to its COVID-19 vaccine, which it successfully developed and launched toward the end of 2020. The vaccine is anticipated to generate revenues of more than $19 billion in 2021. The company’s revenues in 2020 were only $803.4 million, which included less than a month’s sales of mRNA-1273 worth $200 million.

Moderna will replace Alexion Pharmaceuticals in the S&P 500 Index, which will be acquired by AstraZeneca (AZN - Free Report) soon, pending final closing conditions.

The anticipated addition of Moderna to the coveted S&P 500 Index boosted shares, which have exhibited a strong uptrend since the beginning of 2020. Shares of the company were up 7.8% during the after-hours trading on Jul 15 following the announcement. The company’s shares have skyrocketed 1227.5% since Dec 31, 2019 against the industry’s decline of $1.9%.

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The first quarter of 2021 was Moderna’s first profitable quarter driven by full quarter sales of its COVID-19 vaccines. The company recorded $1.73 billion in sales from the vaccine during the quarter. The company is scheduled to report its second-quarter results on Aug 5. It is anticipated to report earnings of $6.08 per share on revenues of $4.35 billion.

Meanwhile, the rising cases of COVID-19 cases in some countries, including the United Kingdom and the United States, due to the rapidly spreading Delta variant may act as a tailwind for the company’s COVID-19 vaccine. Another wave of infections will drive demand for the available vaccines for coronavirus across the globe.

Last month, the company announced that mRNA-1273 is effective against major variants, including the rapidly spreading Delta variant. The evidence that mRNA-1273 can work against the Delta variant has boosted investors’ sentiment for the acceptability of the vaccine as a solution to contain COVID-19 risks going forward. With rising cases of infection with Delta variant, the prospects of an effective vaccine like mRNA-1273 against the variant will likely drive revenues.

Meanwhile, the company is currently seeking authorization for emergency/temporary/conditional use of mRNA-1273 in adolescents in several countries including the United States, Europe and Canada. The vaccine has demonstrated an efficacy of 100% in adolescents, with no cases of COVID-19 after 14 days, following administration of the second dose in late-stage study. It is also developing the vaccine for pediatric patients. The company’s key competitors in the COVID-19 vaccine field, Pfizer (PFE - Free Report) and its partner BioNTech received authorization for emergency/conditional use of their COVID-19 vaccine, BNT162b2, in adolescents in the United States and Europe, in May.

Moderna is also developing booster doses of its coronavirus vaccine, which are likely to increase the effectiveness of the vaccine against the prevalent variants of coronavirus. A potential approval/authorization to booster doses will boost its top-line further going forward.

Zacks Rank

Moderna currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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