Moderna Stock More Than Doubled in August. Is the Stock a Buy, a Hold, or a Sell?

Moderna (NASDAQ:MRNA) shareholders have seen this before: The biotech makes a game-changing advancement, and the stock takes off. The first notable occurrence was during early pandemic days, when the company brought its coronavirus vaccine from the drawing board to commercialization in less than a year. Investors rushed to get in on this innovative company, driving the stock to a 2,000% gain from 2020 through early August of 2021.

And just recently, investors made a similar move. Moderna announced the positive performance of its personalized mRNA cancer vaccine along with Merck's Keytruda in the combo's first late-stage trial. The stock soared 177% in one trading session and ended the month of August with an increase of about 150%.

Investors have now twice recognized the strength of Moderna's mRNA platform in a big way. Still, Moderna stock in the past hasn't kept its gains -- and after the recent surge, some of the good news may be priced in. Considering the full picture, is the stock a buy, a hold, or a sell? Let's find out.

Image source: Getty Images.

Moderna, from early pandemic to today

So, first, we'll consider Moderna's path from early pandemic days to the present time. As mentioned, the biotech soared to stardom with its coronavirus vaccine, a product that brought in more than $18 billion in annual revenue at its peak. Not only was the product a lifesaver, but it also demonstrated the power of Moderna's technology. Moderna uses mRNA to instruct the body to produce certain proteins to help it prevent or fight a particular virus or disease.

But a decline in demand for the coronavirus vaccine in later days of the pandemic weighed on Moderna's earnings and stock performance. The company took action, cutting costs to match the revenue opportunity, and redirecting its focus to other respiratory vaccines, a rare disease pipeline, and its cancer vaccine program.

Meanwhile, Moderna won approval for updated coronavirus vaccines, a respiratory syncytial virus (RSV) vaccine, and, most recently, a flu vaccine. At the same time, the company's pipeline advanced, with the combined Moderna/Merck oncology candidate involved in 10 clinical trials. Of those, four are in phase 3: One involves the treatment for melanoma, while three are in non-small cell lung cancer.

Moderna's gains this year

As investors grew optimistic about this oncology program and the overall pipeline, Moderna stock began to head higher earlier this year. And the recent data confirmed this positive movement. The combination of the mRNA vaccine and Keytruda significantly extended the recurrence-free survival of advanced melanoma patients who had already undergone surgery. This was versus treatment with Keytruda alone, which is currently the standard immunotherapy.

Moderna's treatment stands out as it's personalized, targeting the specific mutations involved in a patient's tumor.

Amid this clearly good news, let's return to our question: Is Moderna a buy? Or has the stock gone too far too fast?

A reason for optimism

Moderna has a solid pipeline, with a variety of programs, and the company has produced excellent late-stage results in melanoma. It's not clear when Moderna and Merck will apply for regulatory approval, but that moment could be just ahead. And though approval isn't guaranteed, we might be reasonably optimistic considering the trial data so far.

That said, it's important to keep in mind that this treatment, if approved, isn't as fast, easy, or inexpensive to roll out as a pill. The production of a personalized vaccine may be costly and logistically difficult. These elements mean it may take time for such a product to generate significant growth.

As in the past, investors cheered as Moderna took early steps in one particular program. It's impossible to predict whether the momentum will continue or, as in the past, Moderna stock may stagnate or even decline. After such a huge gain in August, though, it's likely the stock will pull back to some degree, offering investors an interesting buying opportunity -- I would wait for this moment rather than jumping in at the high.

In any case, I don't expect a potential drop to last forever. This biotech company has proven its technology and is in the process of rolling it out across treatment areas -- a few years down the road, this could produce tremendous growth. That's why it's a great idea to seek a solid entry point and hold onto Moderna stock for the long term.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Merck and Moderna. The Motley Fool has a disclosure policy.