How to Tap Red-Hot Moderna Stock With ETFs
Moderna Inc. MRNA has become the hottest stock lately in the biotech space as it is at the forefront in developing vaccines for the novel coronavirus disease. The stock skyrocketed more than 16% in after-market trading on Jul 14 after spiking 4.5% in regular trading.
The massive gains came on the heels of the positive clinical update for its experimental coronavirus vaccine mRNA-1273. The data demonstrate that vaccination with mRNA-1273 elicits a robust immune response across all dose levels as it produced neutralizing antibodies in all 45 patients. In the trial, each participant received a 25, 100 or 250 microgram dose, with 15 people in each dose group. Participants received two doses of the potential vaccine (read: Biotech ETFs to Gain as Coronavirus Vaccine Hopes Strengthen).
The positive development has pushed the vaccine into the phase 3 trial, which is slated to start on Jul 27. The trial will enroll 30,000 participants across 87 locations, according to ClinicalTrials.gov. Participants in the experimental arm will receive a 100 microgram dose of the potential vaccine on the first day and another dose 29 days later. Some patients will also receive a placebo. The trial aims to determine whether the coronavirus vaccine is actually effective in blocking SARS-CoV-2, the virus that causes COVID-19. The biotech company expects to deliver roughly 500 million doses per year, up to a potential of 1 billion beginning in 2021.
The phase 1 trial study was released in March, which revealed that the vaccine had generated immune responses in eight patients (read: Moderna Soars: Biotech ETFs in Focus).
Overall, Moderna shares have surged more than 280% so far this year. The solid run is likely to continue given that the stock is expected to join the Nasdaq-100 Index, Nasdaq-100 Equal Weighted Index and the Nasdaq-100 Ex-Tech Sector Index on Jul 20. Additionally, most of the analysts are optimistic on the stock, citing that the potential vaccine can generate billions in sales if get approved.
The Zacks Consensus Estimate for 2021 for earnings has been revised upward to 5 cents per share from a loss of $1.57 per share over the past 90 days. This represents robust year-over-year growth of 103.3%. Revenues are expected to grow massively by 722% for the next year. For this year, earnings and revenues are estimated to grow 3.2% and 120.4%, respectively.
Further, Moderna currently carries a Zacks Rank #3 (Hold) and belongs to the top-ranked Zacks industry (top 33%), suggesting strong upside for the stock over the coming days.
ETFs to Buy
Given the bullish fundamentals, investors seeking to tap this biotech firm could consider the following ETFs. These funds are the potential movers in the coming months:
ETFMG Treatments Testing and Advancements ETF GERM
This fund offers direct exposure to the biotech companies directly engaged in the testing and treatments of infectious diseases by tracking the Prime Treatments, Testing and Advancements Index. It holds 56 stocks in its basket with Moderna occupying the second spot at 5.7% share. The ETF has amassed $36.2 million in its asset base within one month of debut and charges 68 bps in annual fees (read: 3 New Coronavirus-Themed ETFs to Hog Attention in 2H).
Principal Healthcare Innovators Index ETF BTEC
This fund invests in companies that are leading the charge toward innovative solutions, rather than spending money on marketing and distribution by tracking the Nasdaq Healthcare Innovators Index. It holds 205 stocks in its basket with Moderna taking the top spot at 5.2% allocation. BTEC charges 42 bps in annual fees and has accumulated $100.6 million in its asset base. It has a Zacks ETF Rank #3.
VanEck Vectors Biotech ETF BBH
This fund offers exposure to 24 companies involved in the development and production, marketing and sales of drugs based on genetic analysis and diagnostic equipment by tracking the MVIS US Listed Biotech 25 Index. Moderna is among the top 10 holdings accounting for 4.7% in the portfolio. BBH has amassed $506.1 million in its asset base and charges 35 basis points in fees per year. It has a Zacks ETF Rank #3 (Hold) with a High risk outlook.
iShares Genomics Immunology and Healthcare ETF IDNA
This ETF follows the NYSE FactSet Global Genomics and Immuno Biopharma Index, which offers exposure to developed and emerging market companies that could benefit from long-term growth and innovation in genomics, immunology and bioengineering. Holding 46 stocks in its basket, Moderna takes the second spot with 4.5% of assets. The fund has $125.3 million in AUM and charges 47 bps in annual fees (read: Top-Performing Biotechnology ETFs Amid Coronavirus Outbreak).
Some of the other popular ETFs like iShares NASDAQ Biotechnology ETF IBB, SPDR S&P Biotech ETF XBI, VanEck Vectors Biotech ETF BBH and Loncar Cancer Immunotherapy ETF CNCR also have significant allocations to Moderna.
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Moderna, Inc. (MRNA): Free Stock Analysis Report
iShares Nasdaq Biotechnology ETF (IBB): ETF Research Reports
Loncar Cancer Immunotherapy ETF (CNCR): ETF Research Reports
SPDR SP Biotech ETF (XBI): ETF Research Reports
VanEck Vectors Biotech ETF (BBH): ETF Research Reports
Principal Healthcare Innovators Index ETF (BTEC): ETF Research Reports
iShares Genomics Immunology and Healthcare ETF (IDNA): ETF Research Reports
ETFMG Treatments, Testing and Advancements ETF (GERM): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.