Moderna (NASDAQ:MRNA) shares are far from the goldmine they once were. Gone are the days when the mRNA vaccine leader saw its stock soar to nearly $500 per share, a peak hit about three years ago. Today, the stock is trading at 85% below its all-time high.
Thursday added another blow, with the stock plunging 12%, sinking to levels not seen since 2020. This steep decline followed a business update that clearly left investors unimpressed.
The company said it will make a significant reduction in its R&D activities, aiming to conserve cash to see out a prolonged period of losses. Starting in 2025, it intends to decrease R&D outlays by 20%, halting several drug programs and abandoning others. The company now projects total R&D expenses of $16 billion from 2025 to 2028, a drop from the $20 billion expected beforehand.
The adjustment follows underwhelming vaccine sales that have fallen short of even light projections. On Thursday, Moderna announced it anticipates 2025 total revenue will come in between $2.5 billion and $3.5 billion, below the Street’s forecast of $3.9 billion.
Moderna also stated that the cost-cutting measures will allow it to avoid raising additional funds before achieving break-even. However, Jefferies analyst Michael J. Yee is not convinced that will actually be the case. “Long-awaited guidance cut sees profitability pushed out to 2028 from 2026, but we still see risk alongside concerns the company may need to raise capital in order to achieve the new guidance,” he opined. “We estimate cash ~$6B at YE/25 but current burn rates deplete cash to <$1B by 2028, likely too low for this operating structure + mkt cap. Nearer-term, visibility remains low on covid/RSV, while INT cancer vaccine also pushed out.”
The result is a downgrade from Yee, whose rating goes from Buy to Hold (i.e., Neutral). The analyst also slashed his price target from $120 to $65, with the new figure implying the shares are still overvalued by 3%. (To watch Yee’s track record, click here)
The Street’s ratings for Moderna breakdown into 8 Buys, 8 Holds and 1 Sell, all culminating in a Moderate Buy consensus rating. The average price target remains a bullish one; at $128.27, the figure factors in 12-month returns of ~89%. However, as several analysts have yet to wade in following the update, it will be interesting to see if more revisions take place shortly. (See Moderna stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
