Moderna stock surged Thursday after the Covid vaccine-maker beat Wall Street's quarterly expectations, including turning around a surprise profit.
During the December quarter, Moderna earned 55 cents per share, on a strict, as-reported basis. That upset expectations for a 99-cent loss per share, according to FactSet. The company also reported $2.8 billion in sales, above forecasts for $2.51 billion.
Part of the earnings surprise is due to $600 million in deferred revenue, Chief Financial Officer Jamey Mock said. But, promisingly, Moderna is also making good on its promise to cut some of its expenses. Last year, the company's cost of sales was $4.7 billion, lower than estimates for $5 billion.
Now, Moderna is looking for 2024 to be a "year of execution," Mock told Investor's Business Daily. The company plans to continue its cost-cutting initiatives, launch a vaccine to prevent RSV and meet or beat financial expectations this year.
"We consider this to be a very important year for execution," he said. "That is the term we use across the company. Definitely with the way the pipeline will work and proving the platform with additional products and the readouts we share there, but also financially. We've made a commitment in 2024 that we plan to meet or beat. So it's very much a year of execution."
On today's stock market, Moderna stock jumped 13.5% to 99.44.
Shares have spent much of this month trapped below their 50-day moving average, according to MarketSmith.com. Shares also have a low IBD Digital Relative Strength Rating of 15. So, their 12-month performance ranks in the lowest 15% of all stocks.
Sales Decline, As Expected
During the fourth quarter, sales declined 45% year over year, "primarily due to a reduction in sales of the company's Covid-19 vaccine," Moderna said in its news release. Earnings also tumbled 85%.
"We applaud Moderna's actions to reposition (Covid vaccine) Spikevax, as the company transitioned to a seasonal endemic market, resized its manufacturing footprint and flattened its commercial structure," Third Bridge analyst Lee Brown said in a report. "We view these efforts positively to allow for greater investment toward other promising growth drivers."
Moderna expected the sales drop-off in the fourth quarter and 2023. Vaccination rates were 20% to 30% higher in the fall and winter of 2022 than the same period of 2023, Mock estimated.
"We hope that's the floor now as we look forward to 2024," he said.
This year, Moderna also hopes to launch its respiratory syncytial virus, or RSV, vaccine for older adults. Moderna will trail Pfizer and GSK, which launched their products in 2023. Last year, Pfizer's Abrysvo brought in $890 million in sales, while Arexvy, from GSK, generated about $1.56 billion.
Moderna hopes to gain approval for its messenger RNA-based rival in the first half of the year. Moderna stock analysts model $321 million in sales of the company's vaccine this year. Mock notes Moderna's shot uses a pre-filled syringe, which could help it gain share from Abrysvo and Arexvy.
Further, there haven't been any incidents of Guillain-Barre syndrome among recipients of Moderna's RSV vaccine. Some participants in both Pfizer's and GSK's studies developed the autoimmune disorder after receiving the RSV shot, according to the Centers for Disease Control and Prevention. It's unclear whether the vaccines caused the events.
"We are excited there has been a nice uptake for the RSV vaccines," Mock said. "We're encouraged the response rate has been good and we hope to add to that."
But Leerink Partners analyst Mani Foroohar says bears will argue Moderna's vaccine loses effectiveness faster than the rival shots. He has an underperform rating on Moderna stock.
Moderna Stock: Slow Growth Expected
Moderna reiterated its expectation for at least $4 billion in sales this year, a drop from $6.8 billion in 2023 and $19.3 billion in 2022.
The company expects to become a two-product company this year, adding more in 2025, Mock said.
"We expect to return to growth in 2025 and break even in 2026," he said.
Moderna stock analysts have similar expectations. The Street forecasts $4.32 billion in sales this year growing to $5.01 billion in 2025 and $7.33 billion in 2026.
Third Bridge's Brown is also watching Moderna's Merck-partnered cancer vaccine. So far, that drug has shown promise in patients with melanoma and lung cancer. Further, Moderna is working on a vaccine to target cytomegalovirus, or CMV. This virus is related to the viruses that cause chickenpox, herpes and mononucleosis.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
