Moderna stock tumbled again Friday on a series of downgrades and price-target cuts following a "tough update" at its R&D Day.
Moderna said Thursday it plans to slash its research and development budget by $1.1 billion in 2027 as it focuses on launching 10 new products over the next three years. The company also issued light sales guidance for 2025 and pushed its break-even point out two years to 2028.
Notably, Moderna said it no longer expects accelerated approval for its Merck-partnered cancer vaccine in melanoma patients, and cautioned uptake for its respiratory syncytial virus vaccine could still be shaky in 2025 given Pfizer's and GSK's lead.
RBC Capital Markets analyst Luca Issi described Moderna's update as tough. He cut his price target on Moderna stock to 75 from 90.
"Overall, we remain believers in the cancer vaccine and what the broader platform can do long term, but with multiple short-term headwinds (including Covid vaccination rates likely to continue to decline and RSV taking time to ramp), we do remain sector perform," he said in a note.
Moderna Stock Extends Its Losses
Five analysts out of 25 downgraded Moderna stock on Thursday, according to FactSet. And 14 cut their price targets on shares.
Moderna stock tumbled 2% to 68.28 on Friday. That followed a 12.4% dive on Thursday.
It's not the first time Moderna's financial outlook has weighed on shares, William Blair analyst Myles Minter said. Moderna also cut its 2024 sales outlook in its second-quarter earnings release.
"Lofty financial expectations followed by guidance walk-backs have been a negative sentiment driver for Moderna, with the stock falling about 41.5% since reducing its 2024 revenue guidance on its second-quarter earnings call on Aug. 1," he said in a report.
Importantly, even Moderna's goal of hitting break-even in 2028 — vs. its previous call for 2026 — could be at risk. The company will need to roughly double its revenue from an expected $2.5 billion to $3.5 billion in 2025 to $6 billion in 2028. It will also have to continue trimming operating costs and finding synergies across approved products.
Minter, who has a market perform rating on Moderna stock, says the company now has a "show-me story moving forward."
"We continue to believe in the (messenger RNA) therapeutic platform and see Moderna as the premier developer of mRNA-based therapeutics from a scientific and clinical perspective," he said. "However, the aggressive scaling of the business to date, substantial cost basis, waning vaccine market dynamics and lofty management financial expectations has turned this into a show-me story moving forward."
Pipeline Updates Also Hurt Shares
Of the 10 new products expected by 2027, Moderna expects to file for approval of three this year. That includes its new Covid/flu vaccine, its next-generation Covid vaccine and the RSV vaccine in high-risk adults age 18 to 59.
In Thursday's update, Moderna unveiled new data suggesting stronger-than-expected responses to its Covid/flu vaccine. But that came with more side effects, RBC's Issi said. Further, Moderna is no longer planning to fly solo with its stand-alone flu vaccine. Instead, the company is planning to run a study with funding Blackstone Life Sciences.
And the Merck-tied cancer vaccine likely won't launch until 2027, he said.
Needham analyst Joseph Stringer kept his hold rating on Moderna stock.
"We thought yesterday's sell-off reflected investors' concerns about worsening financials and a pipeline that now appears to have limited near/mid-term upside," he said in a report. "We still believe in the long-term value potential of the mRNA technology platform, but we think this will take more time to play out and look for more pipeline progress from oncology, rare diseases and others."
This story has been updated to correct the year for which Moderna cast its revenue guidance.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
