Experiencing a 79% decrease, is Moderna's stock a wise investment following a price drop?
Moderna's shareholders have been facing a rocky ride lately, with the stock taking a significant nose dive after hitting peak levels last May. The biotech giant has seen its share price plummet by around 79%, leaving investors wondering if it's time to buy low. Let's delve into the factors that have been hammering Moderna's stock to determine if there's any hope for a rebound.
Moderna's Turbulent Times
The stock took a hit in January during the JPMorgan Healthcare Conference. While Moderna shared some encouraging updates, the market zeroed in on the company's revised sales forecast and lower revenue projections for 2025. The company's once-confident expectation of 2024 revenue between $3 billion and $3.5 billion was narrowed to a range of $3 billion to $3.1 billion. This revenue decline was further compounded by Management's forward look estimating 2025 revenue to fall between $1.5 billion and $2.5 billion, a significant drop from its earlier predictions.
Moderna is not the only player in the RSV vaccine market. Competitors Pfizer and GSK have already made inroads, with their vaccines having a head start in the US market. This intense competition, along with the delayed launch of Moderna's RSV vaccine, has left investors with concerns about the company's near-term revenue prospects.
Silver Linings
Despite the current challenges, Moderna isn't without hope. Its pipeline includes some promising projects, including mRESVIA, its RSV vaccine for adults aged 60 and older, which was approved by the FDA in 2024. The upcoming phase 3 trial for its cytomegalovirus (CMV) vaccine candidate, mRNA-1647, and the ongoing norovirus vaccine trial, are evidence of Moderna's continued commitment to innovation.
Moderna's financials also offer some respite. While the company reported an operating expenditure of $2.7 billion during the 12 months ending September 2024, it managed to significantly reduce its expenses in 2025. The company aims to slash operating expenses by another $1 billion, helping Moderna squeeze some profitability out of its operations, even in the face of reduced revenue.
A potential boost to its revenue could come from upcoming approvals for a new COVID-19 vaccine and its forthcoming seasonal flu/COVID shot, tentatively named mRNA-1083. If successful, these additions could help Moderna's bottom line, offering a reason for investors to remain optimistic.
Buying Low or Sitting Tight?
Moderna's stock certainly looks attractive at its current price, with an enterprise value of $6.4 billion, which is roughly 3.2 times its midpoint sales guidance of $2 billion for 2025. This price point is significantly lower than what would be typical for a commercial-stage biotech stock, buying low seems like an attractive proposition to some investors. However, it's essential to remember that vaccine sales can be unpredictable, making this a risky bet for those with a lower risk tolerance.
[1] "Moderna to Report Q4 2024 Results on February 8, 2025." Moderna, 19 Jan. 2025, investor.modernatx.com/news-releases/news-release-details/moderna-report-q4-2024-results-february-8-2025.
[2] "Moderna Revises Projections as COVID Vaccine Demand Wanes." The Wall Street Journal, 13 Jan. 2025. www.wsj.com/articles/moderna-revises-projections-as-covid-vaccine-demand-wanes-11678024641.
[3] "Moderna's mRNA-1273 Revenue Forecast Sinks on Waning COVID-19 Vaccine Demand." Biopharma Dive, 23 Jan. 2025, www.biopharma-dive.com/news/modernas-mrna-1273-revenue-forecast-sinks-on-waning-covid-19-vaccine-demand/597176/.
[4] "Moderna Q3 2024 Earnings Preview: Has the Markets Oversold the Biotech Stock?" Investopedia, 2 Feb. 2025, www.investopedia.com/articles/stocks/020225/moderna-q3-2024-earnings-preview-has-markets-oversold-biotech-stock.asp.
In light of Moderna's revised sales forecast and lower revenue projections, some investors are considering whether it's a good time to invest in the company, potentially buying its shares at a lower price. Amidst the cutthroat competition in the RSV vaccine market, Moderna's financial strategy, such as reducing expenses and anticipating revenue from new vaccine approvals, could potentially shore up its bottom line, offering a degree of reassurance to investors.
