On Monday, Moderna MRNA provided an update on its financial outlook and pipeline progress at the J.P. Morgan Healthcare Conference. At the conference, the company lowered its previously issued sales outlook for 2024 and 2025.
Moderna reported unaudited/preliminary product sales between $3 billion and $3.1 billion for 2024, toward the lower end of its previously issued guidance of $3.0-$3.5 billion. MRNA also reduced its previously announced sales guidance for 2025 by $1 billion and now expects total revenues in the range of $1.5 to $2.5 billion, down from the previously issued guidance of $2.5-$3.5 billion.
Alongside the financial updates, management announced that it is accelerating and expanding its recently implemented portfolio prioritization and cost efficiencies program. Based on this expansion, it now expects cash cost reductions of $1 billion this year and to save an additional $0.5 billion in costs next year.
Let’s understand the company’s strengths and weaknesses to better analyze how to play the stock after the guidance cut.
Moderna’s Encouraging Product Launch Plans
Moderna expects to launch 10 new products over the next three years and has achieved considerable progress toward this goal. Management announced that it submitted three regulatory filings to the FDA in the fourth quarter of 2024. This includes fresh regulatory filings for mRNA-1283 (next-generation COVID-19 vaccine) and mRNA-1083 (COVID-19 and influenza combination vaccine). A final decision on mRNA-1283 is expected by May 31, 2025. Management also submitted a regulatory filing for mResvia seeking label expansion for use in high-risk adults aged 18-59 years.
With these product launches, management aims to boost the company’s revenues and reduce its dependence on the COVID-19 vaccine, which has been experiencing a significant decline due to lower vaccinations since the end of the pandemic.
MRNA Boasts Strong Late-Stage Pipeline
The company is also progressing well with the development of its pipeline candidates. Unlike traditional vaccines that can take months to produce, mRNA-based vaccines can be developed quickly and offer manufacturing scalability, which was observed in the case of COVID-19 vaccines. Because of this major advantage, Moderna received a project award of $176 million from the U.S. government to accelerate the development of an mRNA-based vaccine program to prevent the spread of the H5N1 virus (also known as bird flu) in humans.
An important candidate garnering investors’ attention is mRNA-4157, an investigational individualized neoantigen therapy developed in collaboration with Merck MRK. Moderna/Merck are evaluating mRNA-4157 in three pivotal phase III studies — one in melanoma indication and the other two in the non-small cell lung cancer area. Since the onset of 2024, Moderna/Merck has also started three mid-stage studies in other oncology indications.
Apart from mRNA-4157, Moderna is also evaluating multiple vaccine candidates in late-stage studies, including CMV, influenza and norovirus.
Moderna’s Targeted Market Space Has Significant Competition
While Moderna's mRNA technology gives it a competitive edge, its products face competition from those of several large pharmaceutical players, such as Pfizer PFE and GSKplc GSK.
Last year, Moderna secured its first product approval outside the COVID-19 vaccine space when the FDA approved its RSV vaccine, mResvia. This has put the company in direct competition with RSV vaccines Arexvy and Abrysvo, which are marketed by pharma giants GSK and Pfizer, respectively. As a result, management expects to record minimal sales from the vaccine in 2024.
MRNA Stock Performance, Valuation & Estimates
In the past year, MRNA stock has declined 66%, significantly underperforming the industry’s 4% decline, as seen in the chart below. During this timeframe, the stock has also underperformed the broader Medical sector and the S&P 500. Shares of Moderna are currently trading below its 200-day and 50-day moving averages.
From a valuation standpoint, Moderna appears attractive compared to the industry. Going by the price/sales (P/S) ratio, the company’s shares currently trade at 2.65 trailing 12-month sales value, lower than 6.54 for the industry.
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Image Source: Zacks Investment Research
Estimates for Moderna’s 2025 loss per share have widened from $8.69 to $8.98 in the past 60 days.
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Image Source: Zacks Investment Research
How to Play MRNA Stock
Moderna, once a financial powerhouse due to its COVID-19 vaccine, feels uncertain regarding its top-line growth after declining sales of the vaccine. The company's revenue forecasts for its RSV vaccines also remain minimal, given the recently issued recommendations by the U.S. Centers for Disease Control and Prevention, which trim down a market that already has two major competitors — GSK and Pfizer.
Though this Zacks Rank #3 (Hold) company appears to be trading at a discount to the industry, we advise short-term investors to steer clear of the stock at present as there is negative sentiment around the stock. We remind investors that this is the second time in six months that Moderna has slashed its sales guidance. The consistently declining earnings estimates also highlight analysts’ pessimistic outlook for the stock.
We believe investors with a long-term horizon should stay invested, as Moderna has a decent pipeline of products. The quick development of mRNA-based vaccines gives the company an edge over its rivals, especially those that are developing traditional vaccines.
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