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Moderna (MRNA) has been a classic example of how one successful product can propel a biotech stock to new heights in a matter of months.
Before developing its COVID-19 vaccine, Moderna had no approved products. However, its success with the vaccine led to a staggering 443.2% stock surge in 2020. Despite growing interest in mRNA therapies, Moderna’s stock has been on a downward trajectory since then.
Last year, the stock declined 62.6%, significantly underperforming the S&P 500 Index’s ($SPX) gain of 25%. Moderna reported its fourth quarter and full fiscal 2024 results last week. So far this year, the stock is down another 13.4%. Let’s find out whether Moderna was a one-hit wonder or if it still has room to grow.
About Moderna Stock
Founded in 2010, Moderna uses messenger RNA (mRNA) technology to develop treatments and vaccines for infectious diseases, cancer, and rare genetic conditions. The company had a breakthrough moment in 2020 during the global pandemic with the rapid development and approval of its COVID-19 vaccine, Spikevax.
With the success of Spikevax, Moderna gained trust in the biotech industry by validating its mRNA platform. Furthermore, it accumulated the necessary financial resources to fuel future innovation. Moderna has since expanded its pipeline to include an RSV vaccine. In addition, the company is looking into next-generation COVID-19 boosters and combination vaccines that target multiple respiratory viruses, as well as vaccines for HSV, Mpox, Lyme disease, Zika, Nipah, Norovirus, and HIV, among others. The company has also received funding from several agencies to support its mRNA technology.
What Led to the MRNA Stock Decline?
Moderna’s revenue has suffered significantly as pandemic-related sales have declined. In the fourth quarter, total revenue fell to $966 million compared to $2.8 billion in the year-ago quarter. For the full year, revenue declined by 52.7% to $3.23 billion.
While sales of its COVID-19 vaccine fell, sales of the RSV vaccine began in the third quarter and reached $25 million in the fourth quarter. The company was highly profitable during the peak of COVID-19. However, profitability seems to be a challenge now. Its net loss stood at $1.12 billion in the quarter and $3.6 billion for the full year.
Is Growth Expected Ahead?
Moderna's future growth is dependent on its ability to diversify beyond COVID-19 vaccines. Its pipeline includes several promising candidates, many of which are in late-stage clinical trials. While the Phase 3 trial for the next-generation COVID-19 vaccine is complete, and Moderna has high hopes for it, its success in the post-pandemic market is uncertain. However, its single-dose vaccine, which targets COVID-19, flu, and RSV, has the potential to be a game changer in respiratory virus prevention. One of its most promising candidates is the cytomegalovirus (CMV) vaccine, which has the potential to become a blockbuster product. It is currently in the Phase 3 trial, with efficacy results expected this year.
In oncology, Moderna is working with Merck (MRK) to develop individualized cancer vaccines for melanoma, high-risk muscle-invasive bladder cancer, non-small cell lung cancer, and renal cell carcinoma, all of which aim to boost the immune response to tumors. The company submitted three investigational mRNA products for regulatory approval in the fourth quarter. Management also stated that the company expects at least 10 product approvals by 2027. If these candidates are approved, Moderna’s diversified product pipeline could help to mitigate the decline in COVID-19 vaccine sales.
Management expects revenue to be between $1.5 billion and $2.5 billion in fiscal 2025, which is consistent with the consensus estimate of $2.1 billion. Analysts expect revenue to rise 30.3% to $2.8 billion in fiscal 2026. Moderna ended the quarter with $9.5 billion in cash and equivalents, as well as investments that will allow it to fund R&D expenses, acquisitions, and pipeline development.
While short-term growth has been hampered, the company’s strong cash position and promising pipeline suggest long-term prospects.
What Does Wall Street Say About Moderna Stock?
Overall, Wall Street is neutral about Moderna stock, rating it a “Hold.” Out of the 25 analysts covering the stock, three rate it a “Strong Buy,” 18 say it is a “Hold,” one suggests it is a “Moderate Sell,” and three recommend a “Strong Sell.” The average target price of $66.41 suggests the stock can rally as much as 85% over current levels. Plus, the high target price of $212 suggests upside potential of 490.36% over the next 12 months.
The Bottom Line on Moderna Stock
Moderna’s pipeline is intriguing, and the company has demonstrated the effectiveness of its mRNA technology. However, investing in developing biotech companies carries risks, such as clinical trials failing or regulatory approvals being delayed.
Moderna operates in a highly competitive market with established biotech companies that have strong product portfolios and abundant resources. Despite the competition, Moderna’s deep expertise in mRNA technology and extensive pipeline give it a competitive advantage. Moderna’s fate in the biotech industry will depend on how well it executes its pipeline and expands its market presence. For the time being, I agree with Wall Street's decision to hold the stock.
