Moderna's spending cuts, pipeline shakeup leave doubts about a rebound, analysts say

By Eleanor Laise

Stock extends losses amid delays in potential product launches, new questions about timeline to break even

Moderna Inc.'s cost-reduction plans, pipeline cuts and reined-in financial guidance, unveiled Thursday, triggered a wave of downgrades as analysts focused on longer timelines to launch some products and questioned when the company will return to profitability.

One key concern: The company's full-year 2025 revenue guidance, issued Thursday, is nearly 8% lower, at the midpoint, than its full-year 2024 guidance - which was recently trimmed back. The 2025 forecast, on the heels of the 2024 guidance cut issued when Moderna reported second-quarter earnings, "is likely making investors lose confidence" and battering the stock, Evercore ISI analyst Cory Kasimov said in a research note Thursday.

Some analysts also questioned Moderna's new timeline for breaking even. The company said Thursday that it aims to break even in 2028 on an operating-cash-cost basis with $6 billion in revenue, whereas it was previously looking to break even in 2026. That $6 billion target would require roughly doubling revenues from 2024 guidance levels, William Blair analysts said in a note Friday, while continuing to cut operating costs.

The updates Thursday compound investors' worries about how Moderna will weather plunging demand for COVID-19 vaccines and an underwhelming launch this year for its second product, the respiratory syncytial virus vaccine mResvia.

Moderna's stock (MRNA) was down 4% Friday morning, after a 12% drop on Thursday.

Some analysts are skeptical that Moderna's efforts to expand the label for its RSV shot will help drive growth. While Moderna said Thursday that by year-end it would seek approval for the RSV vaccine in high-risk adults younger than age 60, Leerink Partners analysts noted that GSK PLC's (GSK) RSV vaccine is already approved for high-risk 50-to-59-year-olds, and it's not clear whether Moderna can differentiate its product.

The Leerink analysts cut their price target on Moderna's stock to $46, from $58, and reiterated their underperform rating.

Analysts also questioned whether there would be much demand for a norovirus vaccine, which Moderna plans to enter into a Phase 3 trial. That's a niche where the company could face competition from Vaxart Inc. (VXRT), which is developing a tablet vaccine against the highly contagious virus.

The pullback in research and development spending puts more pressure on the non-respiratory drug candidates in Moderna's pipeline, particularly those in latent viruses and cancer, to reach the commercial stage, Oppenheimer analysts said in a note Friday. The analysts downgraded their rating on Moderna's stock to perform from outperform.

A key source of potential upside has been delayed, analysts said, as Moderna said Thursday that the Food and Drug Administration has so far not been supportive of potential accelerated approval of a personalized cancer vaccine that the company is developing with Merck & Co. Inc. (MRK). With that potential catalyst pushed back and slim odds for quarterly results to consistently beat expectations, "we think it could be challenging for the stock to perform apace with the group," J.P. Morgan analysts said in a note Friday.

The J.P. Morgan analysts downgraded Moderna's stock to underweight from neutral, and cut their price target to $70, from $88.

Moderna's stock is down 33% in the year to date, while the S&P 500 SPX has climbed 17.9%.

-Eleanor Laise

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09-13-24 1115ET

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