Moderningly Priced Moderna Shares Might Dip to $25, Suggests One Financial Expert.
In the post-pandemic era, Moderna (MRNA 0.42%) has been struggling to shine as brightly as it once did. The healthcare company, renowned for its COVID-19 vaccine Spikevax, saw its stock languish after the health crisis ended. Recent predictions by Wall Street analyst Alexandria Hammond of Wolfe Research paint a gloomy picture, with Moderna potentially trading at $25 per share by this time next year. This is a substantial decrease from Hammond's previous price target of $35, which represents a 30% dip from the stock's current closing price. Despite this, Hammond maintains her underperform, or sell, rating for Moderna.
Moderna's Battles On Multiple Fronts
The downfall of Moderna's stock can be attributed to a multitude of challenges. One such challenge is financial struggles related to cost management. According to reports, Moderna is grappling with high expenses, a significant debt load, and anticipated annual losses through 2026, raising concerns about dilution. Additionally, the company's aggressive cost-cutting measures, which have reduced operating expenses by $500 million, may not suffice to offset the revenue decline.
Meanwhile, Moderna also faces legal hurdles in the form of a long-running patent infringement lawsuit brought against it by Roivant Sciences and its subsidiary Arbutus Biopharma. This lawsuit could potentially complicate the company's financial situation further.
Moreover, the Food and Drug Administration (FDA) placed a hold on Moderna's late-stage trial of a norovirus vaccine candidate following a single participant's development of Guillain-Barré syndrome, an autoimmune disorder. The FDA's hold on the trial could delay the study's completion and impact its efficacy readout.
The Waiting Game
Despite these challenges, investors might see opportunities in executing contrarian plays. However, whether Moderna presents a good buying opportunity remains uncertain. The company's spectacular success in combating the coronavirus crisis was short-lived, and it now requires a new victory to regain its former glory. Analysts are wary of the uncertainties surrounding Moderna's future, which makes the stock a wait-and-see proposition at best.
Enrichment Insights
Moderna's stock performance is influenced by several challenges affecting the company's revenue, cost management, legal issues, and FDA stringencies. The company currently relies heavily on COVID-19 vaccine sales, and has significantly reduced its 2025 revenue guidance due to financial challenges and sales dependence on the COVID-19 vaccines. Moderna faces cost-cutting struggles, with a debt load of $1.36 billion and projected annual losses through 2026.
The company's legal landscape is complicated by ongoing litigation with Genevant Sciences and patent disputes with other companies, such as Arbutus Biopharma. Moderna has also faced an FDA hold on its late-stage trial of a norovirus vaccine candidate following a single participant's development of Guillain-Barré syndrome. These challenges and uncertainties contribute to a cautious outlook for Moderna’s stock performance.
Moderna's financial struggles, including high expenses, a substantial debt load, and anticipated annual losses, are causing concerns about the company's stock performance. Investors are considering contrarian plays, but the uncertainty surrounding Moderna's future, including legal hurdles and FDA holds, makes the stock a wait-and-see proposition. Despite Wall Street analyst Alexandria Hammond's underperform rating for Moderna, the company's stock price could potentially decrease to $25 per share by next year.
Investors might be interested in Moderna's COVID-19 vaccine sales, but the company's reliance on these sales and significant cost-cutting measures are not enough to offset its financial challenges. Moderna's legal landscape is further complicated by ongoing litigation and patent disputes, and the FDA's hold on its norovirus vaccine trial could impact its efficacy readout.
Investors may need to be patient and await a new victory for Moderna to regain its former glory, as the company's spectacular success in combating the coronavirus crisis has not translated into long-term success. Moderna's stock performance is heavily influenced by these challenges, and analysts are cautious about its future prospects.
