What happened
Shares of Moderna (MRNA 12.68%) were moving higher Monday after the FDA granted full approval for its COVID-19 vaccine, which had previously only had Emergency Use Authorization. The stock also appeared to be benefiting from the second straight trading day of a broad rebound in growth stocks, which investors now seem to believe have become oversold.
As of 3:04 p.m. ET, Moderna stock was up 5.1%.
Image source: Getty Images.
So what
On Monday morning, the FDA announced its full approval of Moderna's COVID-19 vaccine, which will be marketed under the name Spikevax, saying it meets the regulator's rigorous standards for safety, effectiveness, and manufacturing quality.
In a statement, Acting FDA Commissioner Janet Woodcock said, "While hundreds of millions of doses of Moderna COVID-19 Vaccine have been administered to individuals under emergency use authorization, we understand that for some individuals, FDA approval of this vaccine may instill additional confidence in making the decision to get vaccinated."
As Woodcock said, the decision may not make much of a difference to Moderna's bottom line nor significantly increase uptake of the vaccine, which is already in widespread use. Still, it could help ease the doubts of some who have been skeptical about it, as it is a clear stamp of approval from the nation's food and drug overseer.
Additionally, the Nasdaq was up by more than 2% in afternoon trading thanks to that broad uptick for growth stocks. That rising tide is likely adding buoyancy to Moderna's shares. The stock is still down by about 70% from the all-time high it touched in September, after falling in conjunction with a number of other high-growth stocks.
Now what
Unlike most growth stocks, Moderna is highly profitable at the moment, and is trading at a cheap price-to-earnings ratio of just 10, though its profits are being inflated in the near term by the booming global demand for COVID-19 vaccines.
That pandemic-generated profit surge is likely to fade over time, but the company has other promising potential products in its pipeline, including a Zika vaccine, a combined COVID-19 and flu booster, and potential treatments for cancer.
In other words, it would be a mistake to assume this biotech will be a one-hit-wonder. Moderna's mRNA technology could produce many other breakthroughs, and the cash influx from Spikevax will help it fund years of research and development efforts.
