Moderna Stock Faces Continued Decline Amid Profitability Delays: What Investors Need to Know
Investing.com — Shares of Moderna (NASDAQ: MRNA) continued to slip in premarket trading on Friday, extending the steep losses from the previous session. The downturn comes after the biotech firm pushed back its profitability target, prompting several analysts to downgrade their ratings.
Key Takeaways:
- Moderna's Financial Forecast: On Thursday, Moderna announced that it will need $6 billion in operating cash to break even by 2028, two years later than previously anticipated. This news drove the stock price to its lowest level in nearly four years.
- Revenue Miss: The company expects 2025 revenue to range between $2.5 billion and $3.5 billion, falling short of Wall Street estimates of $3.74 billion. This projection also trailed behind their 2024 sales forecast of $3 billion to $3.5 billion.
- Analyst Downgrades: Jefferies downgraded Moderna from "Buy" to "Hold," citing potential capital raises to meet the new financial targets. JPMorgan Chase also lowered their rating to "Underweight" from "Neutral," expressing concerns about the stock's performance relative to its peers.
- Cost-Cutting Measures: Moderna plans to cut research and development expenses by approximately $1.1 billion from 2026, reducing costs from $4.8 billion this year to between $3.6 billion and $3.8 billion by 2027. This is part of a strategy to focus on existing products and prioritize commercial growth.
- Regulatory Timelines: The company is experiencing delays in the regulatory approval for its flu and cancer vaccines, which are crucial for future revenue generation. CFO James Mock highlighted that significant revenue from their 10 new products would only materialize post-approval, expected by 2027.
Analysis: What This Means for Investors
Moderna's stock decline is primarily driven by the market's reaction to delayed profitability and lower-than-expected revenue forecasts. Here’s a breakdown of what this means for you:
1. Delayed Profitability
Moderna now expects to break even by 2028, two years later than initially planned. This delay could mean the company will need additional capital to meet its operational needs, potentially diluting the value of existing shares if new stock is issued.
2. Revenue Shortfalls
The projected revenue for 2025 is significantly below Wall Street's expectations, indicating lower-than-anticipated demand for its products. This shortfall can adversely affect investor confidence and stock price.
3. Cost-Cutting Measures
While reducing R&D expenses can help manage cash flow, it could also slow down innovation and the development of new products, which are essential for long-term growth.
4. Regulatory Delays
The delayed approval of key vaccines means that revenue from these products will be postponed. This affects the company’s ability to generate cash flow and achieve profitability within the expected timeframe.
Bottom Line:
For investors, the current situation suggests caution. While cost-cutting measures are a positive step, the delays in profitability and regulatory approvals are significant concerns. It’s crucial to monitor how Moderna navigates these challenges and whether it can align its financial targets with market expectations in the coming years.
In simpler terms, Moderna needs more time and money to become profitable and is making some cuts to spending. However, approvals for its important new vaccines are taking longer than expected, which could delay profits even further. This has led some experts to downgrade their view on the stock, suggesting that it might not perform as well as other similar companies. If you own Moderna stock or are thinking about buying it, be aware that there might be more bumps in the road before things get better.