eyeQ: a huge drug company trading on a discount
Experts at eyeQ have used AI and their own smart machine to analyse macro conditions and generate actionable trading signals. It’s spotted a big stock worth watching.
13th August 2024 10:11
by Huw Roberts from eyeQ
"Our signals are crafted through macro-valuation, trend analysis, and meticulous back-testing. This combination ensures a comprehensive evaluation of an asset's value, market conditions, and historical performance." eyeQ
- Discover: eyeQ analysis explained | eyeQ: our smart machine in action | Glossary
Moderna
Trading signal: long-term strategic model
Model value:$106.15
Fair Value Gap: -30.58% discount to model value
Model relevance: 66%
Data correct as at 13 August 2024. Please click glossary for explanation of terms.
eyeQ is all about macro, but even we’d admit there are times when micro is more important. Big pharmaceutical companies will often fall into the latter camp. R&D, new drug launches, and patents can be all game changers for individual biotech stocks.
Moderna Inc (NASDAQ:MRNA) is in the press for all the wrong reasons at the moment. It faces a class action lawsuit on claims its RSV (respiratory syncytial virus) vaccine is less effective than claimed. This is adding to concerns that the success of the Covid mRNA is in the past. It’s a fear compounded during the recent earnings reports when the company downgraded guidance for the rest of 2024.
But while company news is critical right now, it is worth noting a macro relevance score of 66% on eyeQ. The big-picture stuff such as growth and inflation are also important.
And Moderna stock sits just over 30% cheap relative to macro conditions.
Model value (where the stock should trade) suffered in the recent sell-off but it has stabilised. Interestingly, model value did not make new lows. It’s early days but, if macro conditions can form a base down here, then that would provide support for the share price.
It would still need good news at the company level. But it is one to watch.
Source: eyeQ. Past performance is not a guide to future performance.
Useful terminology:
Model value
Where our smart machine calculates that any stock market index, single stock or exchange-traded fund (ETF) should be priced (the fair value) given the overall macroeconomic environment.
Model (macro) relevance
How confident we are in the model value. The higher the number the better! Above 65% means the macro environment is critical, so any valuation signals carry strong weight. Below 65%, we deem that something other than macro is driving the price.
Fair Value Gap (FVG)
The difference between our model value (fair value) and where the price currently is. A positive Fair Value Gap means the security is above the model value, which we refer to as “rich”. A negative FVG means that it's cheap. The bigger the FVG, the bigger the dislocation and therefore a better entry level for trades.
Long Term model
This model looks at share prices over the last 12 months, captures the company’s relationship with growth, inflation, currency shifts, central bank policy etc and calculates our key results - model value, model relevance, Fair Value Gap.
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